The Big Question: First or Third

[Sage]

So... how exactly does one differentiate 'third-person omniscient' with 'third-person limited?' I feel like I agree with what you're saying, but I also feel like I don't quite understand the concept.

How does one appropriately 'limit' the scope of a detached narrator? Is it, for instance, by using a character who's telling you, the reader, the story from his/her perspective, though he/she wasn't there for it (or for most of it) and is therefore detached?

Or is it something else entirely? I've noticed a lot of debate on the subject, and to be quite honest, I feel a bit dumb; I'm not really sure what to make of it. So, help me understand, CDBZ!