hehehehe.. if you want to "see" the difference.
Set to mode 1 OIS, and purposely make small handshakes while looking thru your EVF or LCD.
You will see the screen feel like a silky flow, as if the lens is moving to compensate the shake.
In mode 2 OIS, you will not see that effect when you slightly shake the camera..
that is how to see the difference. As for the functionalities, the other Gurus have given the explanation liao.. check out your friendly manual.