What is the difference between Domain Forwarding and Cloaking/Masking?
Both Domain Forwarding and Cloaking/Masking will bring your visitors to a Destination URL when they visit your domain name.
So, what's the difference?
Domain Forwarding
Domain Forwarding will simply redirect visitors to a "Destination Address".
With Domain Forwarding, when someone visits your domain name they be automatically redirected to your Destination Address and they will see the Destination Address in the URL bar so that they will know that they have been redirected.
Using the same example from above; now I have mydomain.com, Forwarding to http://www.myhostingservice.net/mywebsite/.
If I have Domain Forwarding set up, when I put http://www.mydomain.com/ into my browser's URL bar and hit Enter, the URL displayed in the bar changes to http://www.myhostingservice.net/mywebsite/ and then loads the site.
Domain Cloaking/Masking
Domain Cloaking/Masking will show the content of the web site but keep the Domain Name in the URL bar.
With Domain Cloaking/Masking, when someone visits your domain name they will be automatically redirected to your Destination Address but they will not know that they have gone to another web address as the domain name will remain in the URL bar of their web browser.
Let's create an example; I have mydomain.com, and it Cloaks/Masks to http://www.myhostingservice.net/mywebsite/.
If I have Cloaking/Masking set up, when I put http://www.mydomain.com/ into my browser's URL bar and hit Enter, ttp://www.mydomain.com/ continues to be displayed in the bar, but it loads http://www.myhostingservice.net/mywebsite/.
Why would I use Domain Forwarding instead of Cloaking/Masking?
You would use Domain Forwarding instead of Domain Cloaking/Masking any time that you want your visitors to know that they have been redirected to another site.
Redirect Traffic from an Old Domain
Since you don't want to lose visitors that visit your old domain name you can redirect them to your new domain name using Domain Forwarding.
Let's say your company recently changed it's name and you have a new domain name. You could setup Domain Forwarding on your old domain name to forward visitors to your new domain name. This way, your visitors will know that you have changed your company name. If you used Domain Cloaking/Masking, no one would ever see your new domain and they would just keep visiting your old domain name.
Draw Extra Traffic to your Site
You can also use Domain Forwarding to direct extra traffic to your domain name. You can register multiple domain names under different extensions and forward the extra domain names to your main domain name.
For example: You have already registered a .com domain name and the .net, info, .org and .biz extensions are also available. You could register all of the other available extensions, then setup Domain Forwarding on those domains to forward to your main .com domain name.
In addition to drawing additional traffic into your site when someone visits one of the other domains, this may also help with your Search Engine Ranking as it will increase the number of valuable incoming links to your web site.