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could someone explain the difference? I dont see any info on the wiki about this setting.
Motherboard P5N7A-VM, E8400 C2D 3.0 processor. NVIDIA 9300 graphics card. OpenELEC Stable - Generic x86_64 Version:3.2.4
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If you add it to the wiki, sure. It simply tells XBMC to run as a window rather than taking over the graphics device for fullscreen.
On Windows XP for instance, you get better Vsync when in fullscreen, however if you run a dual screen setup, then while XBMC is fullscreen on monitor 2 you can't do anything else on monitor 1.
Cheers,
Jonathan