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@wrenn1 -- It's not a dumb question.
The major difference is that you can't make a backup of the books you download through the Kobo Desktop app. They get 'processed' into the SQLite database, and never show up as individual files in the user visible usb drive. Other internal format differences are not documented, and I have not investigated the one book I happened to download both ways. It seems that the Kobo (aka 'shortcovers') format was the most tested, as witness the many problems that epub users have talked about in these threads. At the moment, the Kobo format gives the better experience, but only Kobo sells books in this format. Unless Kobo publicly documents their format, we can't really do a technical comparison.
Aside from the ability to backup my epubs, and use calibre to catalog them with tags, I guess it's mainly a philosophical preference for open standards and public participation.
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