iPod integration: I'm seeing this a lot in new cars. True iPod integration usually means that you connect the iPod to the stereo via the proprietary connector on the bottom of the player. By dock or cable. Only for iPod.
Aux input in the car stereo. Either the car already comes with it or an aftermarket stereo put in. Then cable from headphone jack on iPod to aux input in stereo. Can be used by all mp3 players.
3rd party connector kits: kind of do the same thing aux input does except you connect to the back of the stereo somehow. Might be just for iPods, but could be universal as well. I know Monster does these for iPods.
I just purchased a Zen V Plus and needed to purchase a FM Transmitter in order to listen to music from my MP3 player on my car stereo. However, my friends that own an iPod have said to me that they don't need such transmitter in order to play their iPods on their cars. How is this possible? Why do Zen require a FM trasmitter but iPods dont'?