That's what I'm not clear about: what is the difference, if any?
I seem to recall reading a post asking if using the recovery would download ML instead of Lion. I can't see that happening, but have you heard anything about that?
A command-r boots to the Recovery HD (650MB drive partition) if one is present. From there one can access Disk Util, open firmware password util etc., and the OS installer app. If you start the OS installer app from Recovery HD, it will download the 4GB OS install from Apple and install it. If your machine came with Lion and you are still on Lion, this will download Lion for you with no AppleID. If your machine did not come with Lion, but you are now on Lion you will be asked for the AppleID you purchased Lion with. Then the OS DLs and installs.
If you do a command-r boot and no Recovery HD is detected (like a new, blank drive), the machine (only 2010+) will automatically boot to a firmware recovery mode. That screen will ask for a password to join your wi-fi then it will DL a 650MB recovery utility from Apple which will launch and from there you have the same options as explained in my first paragraph.
Here is the catch. If you have no recovery partition present and you end up in the second scenario with Internet Recovery, that is going to DL and install only the OS the machine came with as that is what is tied to the serial number and the Recovery HD utility it installs is going be Lion.
If you still have a Mountain Lion Recovery HD partition, that CAN
redownload Mountain Lion since it is a Mountain Lion Recovery HD partition.
As an example, my 2012 MBA came with Lion and I have installed Mountain Lion. If I command-r boot it will go to the Mountain Lion Recovery HD partition (which is different than the Lion Recovery HD) and ask for my AppleID I used to purchase Mountain Lion and do the DL and install. If I put in a new, blank SSD and do a command-r boot, it will detect no Recovery HD and go into firmware Internet Recovery, which will then DL the Lion Recovery HD associated with my serial number, and then finally Lion.
There is much confusion in the forums over this, in large part IMO because of Apple's naming scheme for all this.
Here is a well written (and long!) article that explains it all quite well.