Resource Pool is a setting in MS Project that forces MS Project to behave more like Project Insight.
Without turning the Resource Pool option on: When you enter a resource named Dan and and a resource named Daniel, they become different resources. Also, when you type "John Smith, Jr." you are also creating two resources. John Smith is one, and Jr. as another because the comma is used by MS Project as a separator. MS Project sees "John Smith, Jr." as two resources.
Why is this important?
Well, it's not if you are using MS Project as a "one PM and his/her desktop application." For one project plan, you probably won't even notice the difference. However, as soon as you want to share resources, compare project plans to each other, or use Resource Allocation, you need your resources to remain the same and show real data. e.g. I don't know who this "Jr." guy is or Dan/Daniel is way over-allocated once we show that they are the same person.
Choosing the Resource Pool option tells MS Project to select a resource from a resource selection pool like PI instead of just allowing a text entry of the resource name.
MS Project is getting there. Aren't we glad that we can set MS Project to behave more like a multi-tenant product where each Project Manager's choices affect the rest of the team. Because in reality, isn't that the truth? The choices of my co-workers when planning their projects will direct affect what resources I can use and when my project will be allowed to progress.
Please let me know if you found this article useful. Let me know if I can be of additional assistance in any way. I am looking for a dialog in these blogs, but it gets a little lonely... *sniffle*