Basically full window is the same as full screen, but it's a window that takes up the entire screen. This makes it easy for people with multiple monitors to do something on the other monitor while playing. Really the biggest difference between full screen and full window is that when one clicks on the other monitor, the game does not minimize.

The last patch I was able to play like this, either the full screen was not minimizing or setting your window size to the same as your monitor did offset the windowed mode.