Clarify this : apps to sd two types. One is install to the fat32 portion , here you can view all your install files. The other type is install in the hidden partition commonly known as sd ext.
Depend on the rom, some gave you both options to choose. Froyo by default will install in the fat32 portion
Some rom will only install apps to sd ext , such you need to partition your card. If your rom do not install to sd ext, then no need to partition card
Modinstall is actual force install to sd. Some apps as not develop for sd install will appear as a blank logo in home screen if put there as a shortcut. App will still work fine. I find using mod install unreliable and at times cause phone unstable. After reinstall app back to phone memory problem goes away.
All system apps and widgets must install to phone not card
Question always ask: which is better? Actually no good final answer here. Based on my personal experience testing all the roms , I find the sd ext is more reliable , and stable but that's just me.
No wonder I kept checking whether my apps is install in SD or not.