Spacing - you put the the desired relative distance between instances.
Distance - you enter the total distance and Inventor calculates the spacing between instances.
What you use all depends on design intent.
One advantage to Curve Length is it is geometry driven - if you change the model the features will adapt to the change.
This might also be wrong behavior depending on your design intent.
Where Curve Length spacing really becomes powerful is in curved (not straight line) driven patterns.
The Rectangular Pattern tool in really a mis-nomer where it should have probably been called the "Curve Driven Feature Pattern - Where Often the Pattern is Linear" tool, but I guess that name would have been too long.
Have you seen examples of curve driven patterns?
The curve driven patterns are on pgs 16-18.