Hi Andy.Man,
The main difference is easy to see while doing the following:
Take a cube, make it editable.
Click on the Structure Tab to see the coordinates of the points
With the active cube, use the Coordinates tab in the Attribute manager use the scale tool—one time in Object and one time in Model mode.
Now observe the Structure (points) and the Scale (Attribute>Coordinates) while scaling the object.
The Model mode changes the absolute position of the points, the Object mode only the scale.
If you animate the object, once the points are all scaled down to 0;0;0 a new scale will do nothing, as many time zero equals zero. Which might happen during animation! Hence the information from the manual:
The rule of thumb is this: The Model tool is for modeling, the Object tool is for animation.
The same Help Content explains as well why this is relevant for objects in hierarchy (Parent/Child) situations, as the axis might not be in 90ยบ to each other anymore of the wrong mode is used. Please have a look here:
Reference > CINEMA 4D > CINEMA 4D Prime > Tools Menu > Mode
In a Nutshell, if the scale values are all equal for the Parent Object, the axis system stays in tact for the child if rotated. Which can be a decision for you project that makes or breaks the animation. It is certainly helpful to understand the idea of the Matrix and its twelve values (of four vectors) to see what happens in detail. To think only in three axis values might be less obvious, but I complicate it perhaps more right now. ;o)
To get used to the idea, recreate the Sphere (Polygon) and Cube from the example. In my experience, this is a hand on experience and can’t be shared just with words as much as doing it. :o)
All the best