close(result) - a method that can be used to close a modal, passing a result
dismiss(reason) - a method that can be used to dismiss a modal, passing a reason
The answer is in the documentation, right after the two lines you quoted:
The open method returns a modal instance, an object with the following properties:
close(result) - a method that can be used to close a modal, passing a result
dismiss(reason) - a method that can be used to dismiss a modal, passing a reason
result - a promise that is resolved when a modal is closed and rejected when a modal is dismissed
The important bit here being what happens to the promise. On close, the promise is resolved - essentially, the "success" callback fires. On dismiss, the promise is rejected, therefore running the "failure" callback instead.
I found that the dismissing of a modal is best to use if it is from a user closing the modal (e.g. returning to the state behind the modal and invoking state.go('^')), and the closing of the modal is used when changing state via $state.go or ui-sref.
That way you can use the result promise to do different things, depending on the what happens.
result.then(function() { /* state change via ui-sref */ })
result.catch(function() { /* user closed modal */ })