There are two options when adding a domain to your account, an addon domain or a parked domain (Also called an alias in some cases). Both options have their specific uses, these are described in more detail below.
Addon Domain - New unique website, completely separate from an existing site on your account.
Parked Domain - Domain will "mirror" a website that already exists on your account, showing the same content as another domain.
I have a free subdomain called 'mydomain.x10host.com' but I also own 'mydomain.net'. I want everyone to use 'mydomain.net' instead of 'mydomain.x10host.com', in this case I would use a parked domain.
I already have a website up for my business on 'mydomain.net' and now I want to create a personal blog using 'myname.com' which will be a completely separate website from 'mydomain.net'. In this case I would add 'myname.com' as an addon domain. This would create a separate folder on the account where I can put all the files related to 'myname.com'.