Traditionally, running a multi-function and navigable OS with support for applications. Versus a feature-phone which might have a few built-in "apps" but can't generally be extended. That's likely a better name for it, though the press is calling it a "dumphone."

It features 256MB of shared RAM/ROM and some as-yet unknown processor - which is likely to be a fraction of the price and performance of one used in a smartphone. The problem with this whole thing is illustrated precisely by your question. This is not a traditional physical design for a feature-phone and it's only going to cause more confusion and dilution of the smart phone brands. HTC is using the same bloody UI skin for this phone as it is for its Android and WinMo phones. It's nice to have a consistent company UI, but pick a freaking OS already.

This is a problem RIM and Apple don't have and it's one of the reasons they're going to continue building their lead in this space. While RIM does have multiple models, they're all firmly (and successfully) wrapped in the BlackBerry brand. Apple has "iPhone" and "iPod" but most people just see it as the same thing, due in part to Apple's designs and their steadfast policy of calling the platform "iPhone" and forcing everyone to always use iPhone imagery in advertising and products. Palm by comparison, also now has a unified OS position, but is not going this route as far as model branding - it's another thing that will only continue to make them suffer. They're still holding on, but doing horribly in the market.