I've installed Ubuntu 10.10 i386 on an old laptop (Compaz Evo N1015V: 1.2GHz CPU, 256M RAM!). When attempting to log into Desktop Edition, nothing is drawn apart from the mouse pointer - the background remains as with GDM, the panel/nautilus do not appear, keyboard shortcuts (Alt+F2 for example) do not work, etc. "Safe mode", however, works fine.
I managed to solve this problem by removing compiz, which was a bit of a brute-force solution but did the job for this machine.
So one thing that is different between safe mode and normal: compiz isn't started.
But what else? I can't find any documentation about "safe mode" anywhere. What else does it do differently?