There are essentially two different types of graphics processors that can be found in computers in general: integrated and dedicated.
Integrated graphics parts are a part of the motherboard, of the system itself. Motherboards have at least one core chip called a Northbridge, which controls functions like RAM, the PCI Express bus, and how the rest of the computer interfaces with the processor (I'm sure the diehards will probably correct me somewhere, but remember I'm just trying to make this extremely esoteric information palatable.) Integrated graphics have the graphics core built into the northbridge, and they share their video memory off of your RAM. As a result, they eat a little bit of the bandwidth your system is using to interface with the RAM, and reduce the amount of system RAM available. Most integrated parts tend to share that memory dynamically, though, meaning they only take what they need. Only the Radeon Xpress integrated parts have their own memory, and only in AMD systems. I'll talk more about them later.
Despite the shared memory, there are many benefits to integrated parts. They improve battery life, reduce the cost of the notebook, and allow the notebook to run cooler as it doesn't need to cool an extra dedicated chip.
The flipside is that they generally offer very poor performance for gaming, with the fastest integrated parts still being beaten handily by the slowest dedicated parts.
And speaking of dedicated parts: a dedicated graphics core is separate from the northbridge, and has its own video memory. This means it doesn't siphon off the system RAM, although some parts (typically lower end) do dynamically share from system RAM as needed, though only when it would improve performance (and you'll never see them do so in regular Windows operation, only during gaming).
Dedicated graphics parts will always outperform integrated parts, albeit in varying degrees. If you're going to game on your system, you'll need one of these.
The problem with dedicated parts is that they drive up the cost of the notebook, can increase the temperature (as they need to be cooled by themselves), and reduce the battery life. Additionally, due to the power draw and cooling issues, dedicated parts seldom find themselves in ultraportable notebooks.
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