Onboard graphics chips do not differ much from normal ones. They are simply soldered onto the mainboard & either use the system's memory ( the Ram ) for video memory or come with it's own memory chips.
They generally do not perform as well as stand-alone graphics chips but that is because of price considerations. If they were to include the equivalent of a R9800 Pro onto the mainboard's chipset, that chipset alone would be selling for over $150, so the mainboard would sell for about $300.
Sometimes onboard cards can use the same drivers as stand-alone ones as is the case with nForce-IGP cards but if there is one available specifically for the onboard card, it is better to use that one.