Modular meaning you control what the shell does by what modules you choose to load. Consider the Explorer shell in XP generally takes around 40 to 60 megs of physical memory and gives you it's standard interface with little option to change. You can add window blinds to that interface and have it look a bit better, but you're still stuck with the basic explorer layout and you add to used memory and CPU.
Litestep however provides a compleatly customizable interface, added desktop functionality, and even with eyecandy all over the place still runs 15 to 20 megs lighter on memory usage. Now these numbers are purly generalized, but they are pretty damn close across the board. :D

It all comes down to what you want your computer to do for you. If you are happy with the Explorer shell and don't mind it's interface, Litestep might not be for you. If you want something new to work with and look at, then give it a try and at the same time, enjoy the fact that your system is generally going to be running more efficiently.