To understand the distinction, let’s look at Greyhawk vs. the Realms. Greyhawk was designed to be played in if only because there wasn’t much choice otherwise. It was such an early product that it’s design as almost pure map plus gazetteer made a lot of sense. You could take it, pick a spot, and play your game. Yet even bearing that in mind, one of the interesting things about Greyhawk was that it provided a context for the locations of published adventures. I know that sent a little thrill down my spine the first time I discovered a note indicating which hex a particular adventure was taking place in. That was, I think, an inidcation of things to come.
The Forgotten Realms was subtly different. Not so much in content; there were some changes, but not enough to really change the type of product. It was, however, a different beast from a commercial perspective. The Realms were a container, one able to hold any number of smaller supplements, novels, video-games and lord-knows what else. In that sense, the initial boxed set was a skeleton to be steadily fleshed out, and TSR delivered on that promise. The realms might have been thin and disconnected at the outset, but they filled it in admirably.
(At this point there’s a requirement for an obligatory nod to the GMs of old whose insane notes provided the basis for these settings, and I hereby provide it, but only grudgingly. I applaud their creativity while I bemoan the fact that they convinced generations that binders full of data no one gives a crap about were going to be the next big thing.)
This kitchen-sink model has had a huge impact on setting design, but it’s fascinating to me because it’s so much at odds with the realities of play as I’ve seen them. By and large, I have seen games either drill down into a specific are or, if covering a broad area, touch upon the setting very lightly. That is to say, real games tend to be narrow and deep or broad and shallow, but the average boxed set aims to be broad and medium-deep, thereby serving neither need.
Now, product do exist to support these actual approaches. Many settings have “Gazeteers” or similar books - very slim (maybe 32 pages) volumes providing a very high level view of the setting, and almost all setting that produce subsequent books produce more detailed region books, those that zoom in on a specific area. Those products are much closer to the actual usage patterns of play, but they are secondary products.
This suggests a fairly cynical purpose for the main boxed set, which I alluded to above. It’s the stake in the ground that allows a publisher to tether those more-useful document to. The big setting with its big map is not necessarily there to be used on its own, rather, it’s a menu of sorts. It’s a resource that lets you find the glittering object that catches your eye and choose which area you want to zoom in on. At that point, perhaps you will flesh it out yourself, but ideally (from the publisher’s POV, at least) you’ll buy the book that deals with the part that caught your eye. Better still, you’ll be curious about a few areas, and pick up several books!
Does this sound like I’m asserting that the default model of presenting a setting is tooled more towards selling books than use in play? Well, yes, I suppose I am. Not to say that you can’t do both - I can think of several great examples where those two ideas have dovetailed awesomely (Birthright being the absolute best, in this regard). Plus, the people writing these things are almost always doing it out of genuine love, and that tends to muck with more cynical goals.
In some ways, it’s been very fortunate for the hobby that we’re so bad at business.