If you have a page, "page1.aspx" in the pages library, it can be accessed via:
But, perhaps you would rather be able to access it via:
The above would require some sort of routing table. This routing table could have been implemented in a variety of ways, but they happened to decide to use a term set for this. So, that's the simple answer to the question: managed navigation means to use a term set, structural navigation says to use the actual page paths for navigation.
While functional, I agree that using a term set to store a routing table adds a good deal of unnecessary complexity.
Edit: so, if you enable this feature after a bunch of pages have been created, to add friendly urls to the existing pages:
- go to site settings and open the term store management screen
- find the site collection --> site navigation term set
- add friendly terms as desired (click the drop down under site navigation or on an existing item to add a subterm, and select "create term")
- note that if you switch to the navigation tab for a new term, it will have two options checked "show in global nav" and "show in current nav". Also, it will be marked as a "term-driven page with friendly url", not "simple link". (you shouldn't have to change anything here)
- Navigate to the page
- on the page tab of the ribbon, click on "Page URLs"
- the Page URLs screen should show the physical address (http://site/pages/page1.aspx), and the associated URLs, which should just have a link that says " add a friendly url to this page". click that link, and specify the term you just created.
- Test it, when you click on the nav to get to this page, it should now have the friendly url in the address bar of the browser.