I think one of the bigger differences is whether the fabric is waterproof and is supposed to be "breathable". That usually implies some membrane sandwiched in there. In the case of softshell proof, most of those fabrics have a similar or identical waterproof/breathable membrane in them that the usual shells do (aka the usual ski parka or rain jacket). The layers sandwiching the membrane are made to repel water, while the membrane is treated to continue breathing and be a physical barrier to water.

With things like cotton, there's no membrane to worry about, so the stuff just waterproofs the cotton threads. The cotton then repels water, but there's no physical barrier.

These are just some thoughts picked up from friends and the Nikwax website, so I might be off base a bit. I'd email Nikwax- they're pretty responsive I hear.

Though, in the end, my guess is it's mostly hype.
J