I'm probably not giving it enough credit for whatever its intended use may have been but I've really been disappointed by it. From BOL...

[font="Arial Black"]Vowels are ignored in the comparison. Nonalphabetic characters are used to end the comparison.[/font]

In other words, a dash or a space or a digit or just about any punctuation will stop the comparison. That means either it does just the first word or first part of a hyphenated word.

These are probably bad examples of what I don't like about it, but it's the best I can do on short notice.

SELECT DIFFERENCE('Glif', 'Geoffrey');

SELECT DIFFERENCE('Glare', 'Geoffrey');

Because none of the vowels (including the letter "y" in this case), are considered, these two comparisons are both given a "3 out of 4" as a match. That's usually nowhere near close enough for my purposes.

Then take the following example which is just about spot on.

SELECT DIFFERENCE('Geoffrey', 'Mr Geoffrey');

That's only given a "2" because only the "Mr" of the second operand is evaluated because any non-alphabetic character, including a space, will stop the comparison.