It's simple, "true multitasking" is when two programs can run at the same exact time. For example, if you started a stopwatch app, and let it run, and then started the other -- true multitasking would allow both stopwatch apps to be running/counting simultaneously; one in the background while the other runs in the foreground. You can switch back and forth between the two and not lose time in either of them.
On the original iphone, you would have to stop one stopwatch (and lose the time you were recording) to start the other.
On the new iOS4, this is still the case, but the best way to analogize the new pseudo-multitasking save state function is that when you load up the second stopwatch, the first one pauses, but remembers where it was when you switched. Thus, the first stopwatch cannot still record time, but when you switch back to the first, you can at least resume timing where you left off.