As I understand it, erase and readd' the songs each time is what the syncing option does. It automatically adds to your ipod anything you've got in itunes that the ipod doesn't have.

The manual option keeps everything you've already got on your ipod and allows you to PICK what you want to go on your ipod. Like, only wanting to add one song (instead of the 50 new ones like syncing you do)

The manual option also allows you to take stuff from other people's itunes if you connect up to their computer.