This is about as useful a description of the difference I've seen.
Neil
(... from the 3playmedia.com website:)
The Origins of Drop Frame Timecode
Initially, black and white video ran at 30 fps. When color video was introduced, the frame rate slowed to 29.97 fps to allow color television to run on black-and-white receivers. This created a disparity between real-time and video time, as a fraction of a frame cannot be produced in one second. This means that for every 100 seconds, there will be 2997 frames instead of 3000, creating a lag between video time and real time. For example, after 60 real-time minutes, a video playing at a frame rate of 29.97 fps will only read 00:59:56:12.
Drop frame (DF) timecode was introduced in an attempt to make 29.97 fps video indicate real-time to alleviate this disparity. DF does not actually remove any frames from your video; instead, it effectively drops a frame number every time the remaining .03 of a frame adds up to a full frame (once every 33.33 seconds).
In one hour, the difference between a 30 fps video and a 29.97 fps video is 108 frames. So, within that hour, DF video removes 108 frame numbers so that a 29.97 fps video will finish at 01:00 instead of 00:59:56:12. Two frame numbers are removed per minute, except every 10th minute, to make the video 108 frames shorter, allowing the video to end in real time.
(And where it matters ... )
If you are captioning your video, it is important to know whether your video file is drop frame or non-drop frame so that your captions are accurately synched with the timing of the media. At the end of a real-time hour, a DF video will have run 01:00, while at the end of a real-time hour, an NDF video will have run 00:59:56:12. If you caption a DF video with NDF captions, the captions will not be synched with the video and will get more and more out of sync as time goes on.
NDF files are written with all colons (hh:mm:ss:ff) while DF files are written with either a semi-colon or a period between the seconds and frames (hh:mm:ss;ff or hh:mm:ss.ff).