Domain names are sometimes referred to by different labels that reflect their status, for example a Primary Domain, Parked Domain, a Redirect or an Addon domain.
A Parked Domain is a domain that usually sits underneath the Primary domain. Parking is a function of a DNS (Domain Name Server) entry, where the DNS zone for both the parked and primary domains resolves to the same document root (the same content). Domains are frequently parked on top of each other to point all traffic to the same content. A good example of this is when you have registered variations of a domain, for example a .com a .co.nz and a .info domain. With parked domains in place, they will all point to the same web content.
Some experts argue that having parked domains is bad for SEO and it is better to use domain redirects, as they avoid the possibility of search engines penalising a site for duplicate content. However, this is a theory that has many differing opinions.
A domain redirect allows user-controlled configurations of site structure. A redirected domain differs from a parked domain in that it is redirected to an entirely different domain, whereas the parked domains are loading off the same document root. Redirects are typically used to redirect old content to new content. Redirects can be permanent (301) redirect or a temporary (302) redirect in terms of SEO (Search Engine Optimisation). As mentione above, some experts argue it is better to 301 redirect multiple domains to the Primary, rather than to park them.
An add-on domain is analogous to parking a new domain on top of a subdomain. Basically when your host offers you add-on domains they are simply creating a subdomain which points to a new domain. In other words, the domain is running off the document root of the subdomain, as explained in the parking section above.