This mode is the above Multiple mode, but the local MS Windows window manager does not control windows of X clients and a user has to run any suitable remote window manager. The mode is very convenient when users use CDE-like interface where a remote window manager provides its own tool/task bar. In this mode, XServer can work on multi-monitors PCs.
Note that the Restore/Minimize items on the XServer menu provide "visibility" of XServer background in an additional small window. This "x-root window" may be used to control functions of the remote window manager used (usually by pressing mouse buttons).