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It means the content of two tabs is side by side but nothing else like the browser chrome. Haven't used this in Firefox yet, but I certainly find it useful for other apps like file browsers.
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Huh? There's actually more stuff in the way than if you used two windows since the divider is actually larger than the gap between windows is.

The only way this saves on space is if you're using vertical tabs.

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If you want to switch back and forth between "these two web things side-by-side" and "something else" over and over, then in that case it's better than two full browser windows side-by-side because they come into the foreground and vice versa as a unit.
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It is a bit of a continuation of the somewhat annoying trend of integrating features into apps that should be part of the window manager (tabs, in the first place, for example). This one is extra awkward because even windows (which has spent a lot of time behind on window management) can do two things side by side as the same unit now.
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Try it out. It is ok to not like it.
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