This allows your customers to park domains using their control panel. We sell a package to our customers (10 parked domains for a one time fee of $10.00. They are paying for the convenience).
The add on domain allows the customer to add on a new domain into their space. It adds a sub-domain, I believe and then redirects the domain to the sub-domain folder, but shows up fine using the domain URL. The addon domain does not have its own control panel and emails are a little awkward to add as it seems a bit confusing, but works.