Classic vs Integrated
Classic mode (theonly mode in IIS6 and below) is a mode where IIS only works with ISAPIextensions and ISAPI filters directly. In fact, in this mode, Asp.net is justan ISAPI extension (aspnet_isapi.dll) and an ISAPI filter(aspnet_filter.dll).IIS just treats Asp.net as an external plugin implemented in ISAPI and workswith it like a black box (and only when it's needs to give out the request toASP.NET). In this mode, Asp.net is not much different from PHP or other technologies for IIS.
Integrated mode,on the other hand, is a new mode in IIS7 where IIS pipeline is tightlyintegrated (i.e. is just the same) as Asp.net request pipeline. ASP.NET cansee every request it wants to and manipulate things along the way. ASP.NET isno longer treated as an external plugin. It's completely blended and integratedin IIS. In this mode, Asp.net HttpModules basically have nearly as much poweras an ISAPI filter would have had and Asp.net HttpHandlers can have nearlyequivalent capability as an ISAPI extension could have. In this mode, Asp.netis basically a part of IIS.