Clicking the "Configure" button with the external monitor rectangle selected brings up the "Configure Display Device" dialog, and we are presented with three choices: Disabled, Separate X-Screen, and TwinView..
"Separate X screen" does literally that. You can transition the mouse from one screen to another, but not drag applications across.
TwinView, like Xinerama, tries to connect the monitors, making the screens appear to be seamless from one display to the other. TwinView makes the X-Server think that the two displays are actually one. This may have an advantage for certain graphics applications such as those using OpenGL direct 3D rendering, at the cost of some overhead from the driver.
However, I got an odd result when I tried this. The external monitor became the primary monitor, and the task bar wasn't even drawn on the laptop screen. Oddly, though, it retained the icons that I'd placed there.