Well,
1. Root copy is not a squashfs filesystem, so it allows for quick tweaking and modification without having to "commit" your changes. This also makes modifications (for the purpose of troubleshooting) much easier.
2. The alternative filesystem module is still a single file. The new feature allow for the specification and ordering of filesystem modules. For example, imagine the following:
filesyste A contains all necessary files to boot a system into a basic shell with basic functionality, nothing more. Branch filesystem B contains a bunch of advanced tools (coimpilers, scripting environments, etc. Branch filesystem C contains X and Branch Filesystem D contains all of the X Bloat applications.
Together, all four branches are roughly the size that the one "monolithic" filesystem D would have been if I wanted to use the legacy modules directive, but now, I have a boot time option to specify if I want just A for a tiny system, (A and B) for more functionality, (A, B, and C) for a GUI, or (A, B, C, and D) for all of the bells and whistle. Now I get all of that and don't have four copies of the filesystem. Furthermore, if I then add a file to A, It will be present when booting into D due to squashfs.
It is really nice.