power supply unit confusion..

It doesn't actually mean either of those things. In fact, I would say that the marketed value on a PSU is a pretty meaningless term.

In most cases, the marketed value on the box is determined by the maximum rated output capacity.

On cheap PSUs, this value is often determined by placing full loads on all voltage rails. This includes the 12 volt rail (most important) 5 volt rail, 3.3 volt rail, 5 volt standby rail, and -12 volt rail. The power delivery on all of these individual rails is summed up to reach the value printed on the box. Many cheap PSUs cannot safely deliver the marketed value without failing, and exceeding it is almost certain to cause damage.

On high quality PSUs, this value is determined before hand (marketing purposes) and internal circuitry prevents it from exceeding the combined output capacity even if the internal hardware can safely do so. In this case, the combined output capacity can be derived from loads on any of the output rails up to each rail's individual maximum.

This sounds a little bit confusing, so lets do some math

A cheap 500 watt PSU may have the follow breakdown:

100 watts on the 3.3 volt rail
100 watts on the 5 volt rail
285 watts on the 12 volt rail
15 watts on the 5 volt standby and -12 volt rails

The manufacturer adds all of these values together to obtain 500 watts. However, a component which is attached to the 12 volt rail (which is most components) cannot tap unused output from the 5 volt rail or 3.3 volt rail.

A good 500 watt PSU may have the following breakdown:

125 watts on the 3.3 volt rail
125 watts on the 5 volt rail
480 watts on the 12 volt rail
15 watts on the 5 volt standby and -12 volt rails.

The manufacturer places a cap of 500 watts on the combined output, regardless of where it is drawn from. 95% of that load can be drawn from the important 12 volt rail without exceeding that rail's current limitation.

In the two examples above, both PSUs are marketed as "500 watts". However, the good PSU is far more flexible, and can deliver nearly 200 watts more on the 12 volt rail than the cheap PSU can.

That answers one of your questions.

The second question is a measure of efficiency of the power conversion hardware.

PSUs are rated in terms of DC output power (watts) after it has been converted from AC input power (volt amps). This conversion process is not 100% electrically efficient and some power is burned off inside the PSU as waste heat. There's an industry standard organization known as 80Plus which owns a set of trademarks. Manufacturers that meet certain efficiency standards can be certified by the organization and are allowed to place the trademark on their box. There are a variety of different certification levels including:

80 Plus
80 Plus Bronze
80 Plus Silver
80 Plus Gold
80 Plus Platinum

Bronze and Gold are by far the most common, but there are a few Platinum rated PSUs out there. Platinum PSUs are over 90% efficient at loads between 20% and 100%, which means that no more than 10% of the input power is burned off as waste heat.

For a breakdown of all the different efficiency ratings, click here

This means that if your output load is 200 watts, your input load will be around 222 VA at 90% efficiency (I'm ignoring PFC for the moment). 22 watts will be lost as waste heat inside the PSU.

Compared to a cheap PSU with 70% efficiency, the same output load would have an input load of 285 watts, with 85 watts being lost as waste heat inside the PSU.

Waste heat needs to be removed from the PSU to prevent damage; this requires a noisier fan. Over time it will also add up on your electrical bill.

I hope that this answered your question