There are two types of tablet screens: touch screens and active digitizers. Touch screens respond to the touch of your finger or stylus and the cursor jumps to whatever point is touched on the display. Active digitizers sense the tip of the stylus as it approaches the screen surface and display a pen/mouse cursor.
The advantage of the touch screen is that you can use your finger or any pen device for data input. The disadvantage is that there is no "cursor tracking" which can make it difficult to work with applications where precise cursor placement is needed. The advantage of the active digitizer is that it makes for very precise cursor placement, but if you lose the pen you're out of luck as the display does not respond to touch of any kind.
This is why Tablet PC manufacturers are now moving to displays that combine both touch and active digitizer capability. These displays are referred to as Dual Mode screens. They work like a touch screen until they sense the proximity of a digitizer stylus. When the stylus approaches, touch input ceases and and the pen cursor starts. When the pen is pulled away, the screen once again responds to touch.