If the option is "Lower", the most recent active window is brought to the front without actually minimizing the window on which it was clicked on. However, if you set the option to minimize, the current window is actually window is "minimized".
As far as I have noticed, if you minimize the window, you will not the see the window anymore on the workspace and you will have to use ALT+TAB to bring it back to life. You will not see the minimized application even if you minimize all other applications. If the window is lowered, you will be be able to bring it back to life by "lowering" the other active windows.
I do not know if there are other differences, but this is the working difference as far as I have noticed. I do not even understand why there are these separate options but it has not hurt me in anyway as yet.