AFAIR mode 1 turns off the heater once it reaches the threshold. In mode 2 it is turned off as long as the protect condition is met. No heater fault is generated in both cases, thus the print is not paused either. This heater protection system allows multiple sensors (even RH sensors) to be coupled to a single heater. Another use-case could be a the protection of a heater using a backup temperature sensor.
The last example in the M143 description already describes a valid demo of mode 2.