Parked Domain: A parked domain is an additional domain which points to the main directory of your account. You can park an unlimited number of domains at no cost. A parked domain will resolve to your primary domain name.for example your primary Domain is abc.com and you parked Domain xyz.comIn the address bar if you type xyz.com it will resolve to abc.com but in the address bar you will see xyz.com. This is a parked domain.
Add on Domain:An Add on domain allows you to run a differnet web site to your primary domain. When you create an add on domain, it makes a folder in your public_html folder and you can upload the website content into that folder. So essentially you are running two different websites, separate content, off one account.