What is the difference between ‘classic’ and ‘integrated’ pipeline mode in IIS7?

Classic mode (the only mode in IIS6 and below) is a mode where IIS only works with ISAPI extensions and ISAPI filters directly. In this mode, ASP.NET is not much different from PHP or other technologies for IIS. This separation of the IIS and ASP.NET request-processing models results in duplication of some processing steps, such as authentication and authorization.

Integrated mode, on the other hand, is a new mode in IIS7 where IIS pipeline is tightly integrated (i.e. is just the same) as ASP.NET request pipeline. ASP.NET can see every request it wants to and manipulate things along the way. In this mode, ASP.NET HttpModules basically have nearly as much power as an ISAPI filter would have had and ASP.NET HttpHandlers can have nearly equivalent capability as an ISAPI extension could have.