There are several big differences between Video Demo (pure demo, only output to a video format) and a Software simulation, that can be interactive and also used as an assessment because you can capture such a simulation in three modes: Demo, Training, Assessment. I recommend always to capture the three at once, you'll be able to combine slides into one file later on. Even the files are different; cpvc for the video demo that has its own editor and cptx for a simulation application.
A simulation will always have one slide per step, which makes it much easier to edit, to add voice overs and other objects compared to a normal video edit process. The default settings for the slides are 3 seconds, for the user the experience will be as if he is watching a movie because transition between slides is smooth. Timeline will never extend beyond the 3 seconds unless you add objects later on and change the timeline duration. That is mostly unneccessary, because in a training simulation each slide will automatically get an interactive object that will pause the slide and invite the user to 'do' something.
Timeline for cptx-files is the most important feature to learn about and I find it very strange that most Captivate books seem not to start with it. Training should start with Preferences, Object Style Manager, Themes and then focus on the Timeline.
Here is an old blog post that will explain some features of the timeline. And too bad, in the newbie UI of Captivate Timeline panel is hidden by default, find that personally not very user friendly:
Tiny Timeline Tidbits - Captivate blog
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