An open differential (normal diff) lets torque take the easiest path to the ground. Generally this means that you get one-tire-fire (one axle spins more than the other) either at launch or around turns.
A limited slip differential (LSD) counters this effect by joining the two axle's movement via a mess of helical gears inside the diff. By doing so, torque is biased more evenly and traction loss due to wheelspin is greatly reduced, which translates into better launches, and less throttle on understeer through the turns, better grip exiting turns, and a big grin on the driver's face
Definitely worth $300 IMO.