PARKED DOMAIN
A parked domain is an additional domain that points to main directory of your account / primary domain. You can park an unlimited number of domains at no additional cost. A parked domain will resolve to your primary domain name.
For example, let's say your primary is abc.com and you park xyz.com. In the address bar if you type xyz.com it will resolve to abc.com (i.e., show content from abc.com) but in the address bar you will see xyz.com.
ADD-ON DOMAIN
An add-on domain allows you to run a separate web site within your primary domain hosting account. When you create an add-on domain, it makes a folder in your public_html folder and you upload the site content into that folder. So essentially you are running 2 separate sites, separate content, off of one hosting account.
For example, let's say your primary is abc.com and you create add-on domain xyz.com. The add-on domain is pointed to the xyz.com folder under public_html in your hosting account. In the address bar of your web browser, if you type xyz.com it will resolve to/display the content in the xyz.com folder/site and in the address bar you will see xyz.com. You can create separate email accounts for each domain name regardless if it is a parked or add-on domain.
NOTE: Using parked domain names can cause a negative effect on search engine ranking. Because the content will be the same for both sites (each with distinct URLs), Google (and possibly other search engines) will likely consider this duplicate content. Google may penalize or ban one or both sites if this is found. Your mileage may vary.
