This is really a "Search MR" question... but the basic difference is that the system folder and root library folder are copied to a backup directory, so if anything in them conflicts with the new install, it won't stop Tiger from working.
Another question to ask while we're at it...do you have any "system modifications" installed? Things like anything Unsanity makes, anything that adds a preference pane in sys prefs, anything that always runs in the background or otherwise modifies system behavior all the time? If so you should remove it before upgrading to Tiger. It's not always necessary, but given that your upgrade fails....