The kernel is a big hunk of binary that is loaded when you boot up Linux. A module is just a piece of that binary code separated from the rest, so it can be loaded only when needed (and unloaded when you're done using it). The idea is that you would compile something you might use (even though not very often) as a module, which makes the overall kernel a little smaller and potentially faster. If the option in question is something you plan to use all the time, then you'd probably want to just compile it into the kernel (by answering "Y").
Last edited by wapcaplet; 01-18-2005 at 10:27 PM.