While modular homes are technically a type of prefabricated home, most manufacturers use the term prefabricated home to indicate panel building and modular to indicate a home that is put together in boxes or modules. With panel building, the flooring, walls and other features are built at a factory and then assembled by lifting the panels in place with a crane and attaching them. With modular homes, the crane lifts the boxes in place and stacks them like blocks.
Panel building works well when the building plans do not conform to the boxes a modular home requires. The panel walls allow the builder to create open spaces and higher ceilings. The process allows for precise construction of panels in a factory and transportation in smaller pieces than modular construction. The finished home has the same structural strength as stick built or modular home. Manufacturers have the option of shipping flooring panels flat or attaching toilets and other plumbing fixtures to the floors at the factory before shipping.
The boxes of modular homes are usually shipped on flatbed trailers. This limits the width of the box to 16 feet. Newer construction techniques allow manufacturers to build boxes with more open sides giving the designer the option of opening spaces within the home.