My questions are, what exactly are Vellum's Kindle-specific changes in the Kindle epub, and how great of a difference does it make with how files appear in Look Inside and Kindle Cloud Reader? Does the difference depend upon if the user has unique elements like tables or drop caps? Or do the differences manifest across the board?
Vellum's Kindle-specific output contains a number of workarounds for potential issues on the Kindle platform. One of these issues is that, as Amazon converts your file to the multiple formats used throughout its system, it will create a file in their older 'mobi7' format. This particular format is very old and extremely limited. It is primarily intended for older devices (i.e. the original Kindle), but it can still (sometimes) be used in Look Inside and in Kindle Cloud Reader.
There can be a number of issues with this translation to mobi7, especially for ebooks that use a fair amount of CSS for style and use modern CSS constructs like
combinators. A selection of CSS that scales down the font size in a Copyright page, for example, may be incorrectly translated to scale the font size for the entire book.
To avoid these issues, Vellum wraps any CSS that may be mis-translated into a special
media query that tells Amazon to ignore the style when converting to mobi7. These are non-standard, Amazon-specific media queries, however. They wouldn't make sense to see on any other platform, and wrapping style in this manner can cause issues on platforms that don't properly handle media queries (like Nook). For that reason, Vellum only uses these media queries in its Kindle-specific output, and not in output for other stores or in its "Generic EPUB" output intended for aggregators like Draft2Digital. And that's why you may have issues if you upload Vellum's Generic EPUB output to Amazon.
For Vellum users, the key bit is to always upload Vellum's Kindle-specific file to Amazon, and not its Generic EPUB output. That advice is not new, but given Amazon's new requests for EPUB files, we felt we needed to remind our users to make use of Vellum's
Kindle Ebook Format controls rather than upload a file intended for another store.
If you're not using Vellum, then the advice of using Kindle-specific output vs Generic EPUB doesn't really apply. But if you're writing your own CSS, and encountering problems when your file is converted to mobi7, you may want to look into Amazon's proprietary media queries. More about those media queries can be found in their
Kindle Publishing Guidelines. But nothing here is really affected by this change in preference for EPUB files over MOBI. As AaronShep mentions above, Amazon's been working from EPUB files for some time now.
Hope that helps.