Not very clear words, indeed...
Run the attached experiment. "Offset" (in column mode, i.e. when IsCol=true) is the distance of a location from the left edge of the grid. This is marked in the project by a bevel seen at the top and bottom of the grid.
The left button "Physical=true" calls OffsetToColRow with the "physical" parameter set to true, and the other button "Physical=false" calls it with Physical = false. The column indices are displayed in the fixed row of the grid.
Now run the demo. Click the left button - the output of OffsetToColRow is displayed in the form's caption, it says: "Index = 2"; since we have IsCol=true this means: Our offset points to column 2. The same happens when you click the other button which queries for Physical = false.
Now scroll the grid horizontally. At the end of the scrollbar, the marker is in column 6 on my system - and this is returned when you click the "Physical = true" button. But when you click the "Physical = false" button we still get Column 2.
So it is clear: Physical = true returns the column index when the grid is scrolled, and Physical = false returns the column index for the unscrolled grid.
I updated the docs file.