In the domains section of the control panel, there are a lot of options which may initially seem fairly similar. Only the hosting plus account uses addon domains.
A subdomain is a subsection of your website that can exist as a new website without a new domain name. They can be used to create memorable URLs for different content areas of your site. For example, you can create a subdomain for your blog that is accessible through blog.nwdemo.co.uk and www.nwdemo.co.uk/blog. Importantly for addresses, the subdomain is always in front of the main domain, i.e. example.nwdemo.co.uk.
Domain aliases (previously known as parked domains) make your website available from another domain name. For example, you can make www.nwdemo.net and www.nwdemo.org show content from www.nwdemo.com. As well as that, only www.nwdemo.com will be shown in the address bar.
Redirects act in a similar way to aliases. With redirects, you can point a single page or a domain to a different domain.
An addon domain is an additional domain that is stored separately to your main site. This means that an additional domain can act as an entirely new website. This also allows email accounts to be added to the new domain.