The major difference between e-mail forwarding and POP e-mail is the ability to send out email. With an e-mail forwarding account, you will not be able to send e-mail using the email address associated with your domain name. E-mail forwarding works like phone forwarding; the e-mail that is being sent out will be sent to another, 3^rd party e-mail account (for example, your Gmail or Hotmail account), whereas POP e-mail accounts have a dedicated inbox to receive the email, have the ability to compose and reply, or create new email.  WIth email forwarding, replies would be seen as coming from your other (Gmail, Hotmail, etc...) account.