The differences include D3 not offering athletic scholarships, playing a 40 vs 56 game schedule, athletes not receiving any privileges not afforded regular students(i.e. tutors/note takers and the like), and a lesser amount of time for Fall practice.
In terms of the quality of play, our son played at a very good DIII in TX. They certainly had some players who were DI quality, even high DI quality.
But, to be candid, DIII in TX is not likely to be the quality of DI play. The reason is DI's, even mid level, have more pitching and pitching depth. Additionally, the 6-9 hitters in a DI are likely to be better that the 6-9 hitters on a top DIII.
Certainly there can be some exceptions. The quality of DIII baseball in TX has risen dramatically. UT Tyler, UT Dallas, TLU and Trinity are at the top of the DIII's and they have players who are top DI quality as evidenced by the June 2007 draft.
In the overall, though, DIII baseball in TX should not be as good as a DI which is fully funded, over the course of a season.
If your son is one receiving that type of interest, the other signficant difference can be playing time. DI quality players in a DIII program, if they work hard, are usually going to play nearly every inning of every game from the time they are freshman. If they are at the DI, they likely will not see too much action until their sophomore/junior years.
Hope this summary is of help to you.