My understanding is that the difference is pretty much as the adjective "terminal" would describe -- a terminal masters is where the degree stops. That is, once you get the masters, you're done (Congratulations!); whereas, a non-terminal masters means that it's more like a checkpoint along the way to a more advanced degree (i.e., the doctorate). I believe that with the masters-on-the-way programs (non-terminal masters), you're getting a general masters degree that can be used to get such things as a masters-level counseling license in order to work outside the school during the remainder of your education. Additionally, my understanding is that if you get a masters-level license (fulfill the req'ts for masters licensure) prior to going on internship, it makes you more employable during your internship and following graduation (while you work on your doctoral licensure), since you have at least one level of licensure already (instead of having a Ph.D. or Psy.D. and no license of any kind).