The Cliff note answer is that the difference applies to the aerodynamic shape difference between bullets. Generally, a more traditional flat base spitzer shaped bullet would use the G1 formula. The streamlined, pointed, boar tail, VLD style bullets would use the G7 formula. This difference is expressed by the bullts ballistic cooefficient. When using a ballistic calculator the different algorithms used between G1 and G7 takes into account the difference in bullet shape and it's effect on retaining velocity, which increases in importance as the range increases. The result will be more accurate sight corrections for elevation and windage. Hope this helps.