Basically, (I think) he/she's saying there's three kinds of games we're looking at: Linear, Mixed, and Free-form.
Linear: You have little control over the character, you just have to work out how to procede to the next part of the story. Not really an RPG, more of an interactive story. King's Quest and Doom are good examples.
Free-form: Do what you want, when you want. There may be greater missions, but you are not rigidly compelled to stick to them. GTA and The Sims are good examples.
Mixed: The side-quest formula. Free-form on a level by level basis. You still need to finish each level to progress through the stoy. Also, you can change you character to play in a different way each time. Diablo and Deus Ex are good examples.
Quezi said that Diablo and Divine Divinity are in the Mixed catagory. I agree with Diablo but personally, I'd put Divine Divinity about half-way between Mixed and Free-form.
