That's my understanding of mode 1: the GPS unit continues to track location, even if the
camera is switched off. Thus, when you switch on, the GPS unit does not have to re-acquire the satellites. Location data are recorded in images.
In mode 2, the GPS unit is off (so less power is used than for mode 1), but, when you switch on the
camera, the GPS comes on as well and will re-acquire the satellite signal and, once acquired, will place location data into images from that point onwards.
If disabled, the GPS unit is inactive and no location data will be recorded.