Armory does away with the base-game system of MOLLE pouches, and instead uses a simpler, insert-based system. In plain terms: you can "attach" as many pouches to a PALS webbing (of where there may be multiple) as you see necessary, by putting them "inside" the webbing, much like you would a regular item into a regular pocket. While "attached", each pouch takes up volume, and may come into conflict with other pouches on the same webbing.
This more-accurately reflects how pouches are organized in reality. While the base-game system is correct in that it deals with slots (the amount of PALS cells each pouch required to be attached securely), its hardcoded nature means there's little flexibility in adding even some of the existing pouches to accurate dimensions. Armory's volume-based system allows players to stack pouches much like a field operative (or, more likely, like a civilian enthusiast) would.
While the existing system is certainly enough to emulate a working PALS webbing, it has its limitation. Some of them, like lack of interaction between attached pouches and hardcoded nature, have already been illuminated.
Another aspect that the base-game system can't tackle is different levels of encumbrance and speed of interaction for each webbing or panel available. For example, it's quicker to reach a pouch on your front end than one on the side. Similarly, with larger side webbings come more space for items but also higher encumbrance ceiling. All of this is only possible (at least at present, as this document is being written) through the usage of the pocket system.
Something else that get overlooked in Cataclysm is the ability to tuck smaller items in: under the belt, under PALS cells etc.. This is particularly obvious with MOLLE, where belt-like space is plentiful. (This could, theoretically, be circumvented by adding another layer of pockets to each item with MOLLE webbing, but that would require more work in terms of maintainance and portability to a newer version of the pocket system than working with a single "pocket" that combines both MOLLE and belt-like space.)
All of this neglects to mention a finer degree of control offered by pockets as opposed to a hardcoded MOLLE system. Some plate carriers combine PALS webbing with hook-and-loop straps, enabling use of two separate systems of attachment at once. Some PALS webbings are constrained in available volume by surrounding features, such as sewn-in hook-and-loop panels for institution identification (police, EMS, FEMA, SWAT, FBI etc.) or having the lowest end of the webbing close to the bottom edge of the carrier; such webbing cannot be easily given the extra space if such is affordable.
While Armory's system is hardly perfect, we believe its advantage outweigh its requirements and limitations to a degree where the new system is preferable.
(It's worth nothing, for some historical context, that this was also the system that was used in the original, demo-stage Armory several years ago. The current hard-coded system was very likely developed in its image, up to and including specific types of pouches introduced alongside integration with the base game.)
Because pouches are interior to a PALS webbing "pocket", there is now a maximum volume the entire webbing's worth of pouches can take at a given time. This means that, while most pouches offer finite capacity, others don't, thereby preventing other pouches to be added to the webbing. For example, stashing a full-sized pistol with a suppressor is now possible in a universal holster, but doing so will prevent you from attaching other pouches to the webbing. (This will also magically "overflow" the webbing and force some pouches out if the stashed pistol ends up taking up more space than the webbing allows, something that remains one of the pocket system's limitations.)
Some of the pouches now also provide their own (limited) PALS webbing. It's intended to be used for attaching supplementary pouches, but can also be used for tucking small items in. This is reflective of what many commercial pouches provide: an increasing (and sometimes excessive) degree of MOLLE modularity.