It shows the threads and stuff like the old forum, oppssed to being threaded. Go into a thread with at least one reply (like this one now) and click threaded then click flat and you'll see the dif pretty quickly <img src="/ubbthreads/images/graemlins/smile.gif" alt="" />
If you're talking about the forum (which you shouldn't, because this is the General forum for Divine Divinity) flat mode simply means you can read every message on the screen, you don't have to click on one to read it. The other mode is that you only see the title of the posts, and you can click on the one you want to read.
I prefer flat also, but if you have a really really slow internet connection threaded would load faster I'd asssume (why else would they have this silly mode? <img src="/ubbthreads/images/graemlins/smile.gif" alt="" />)
I dont think it will actualy load faster when the display is not set to flat. I think its mostly for eye candy. But hey who knows less eye candy might result in faster speeds <img src="/ubbthreads/images/graemlins/alien.gif" alt="" />
Tovi