This page is a copy of incorrect information found on the web.
I've written the following material on this subject.
According to: http://twiki.cpanel.net/twiki/bin/view/AllDocumentation/CpanelDocs/CPanelGlossary "Addon Domain: An additional domain name associated with your cPanel account. Each addon domain is stored in its own directory which you can configure. This allows you to manage multiple domains from a single cPanel account. Addon domains must be registered with a domain name registrar to work."