Er: What's the conceptual difference between menu buttons over a moving background and "buttons on video" as a new feature of V7? Is it that the "background" video can play all the way to the end rather than a loop of defined length?
Just to pick nits, it's not a feature of V7, it's a feature of DVDA4.
From a conceptual perspective, both are very much the same, however each has its own advantages and disadvantages.
For example, with a menu you are limited to a size of 1GB for all of your menus in the VTS, not so with the content you'd have with a BOV. BOV's appear or disappear based on chapter marks, not so with button masks on a menu; also as each BOV appears, you can have a different action associated with it than the one before it. BOV's expire after activation and may disappear from view, menu button masks don't. Actions that a BOV cn perform are more limited than the actions that a menu button can perform.