Linear rewards means rewards are proportional to Steem Power.
Exponential rewards means that rewards are proportional to Steem Power squared.

PALnet uses 1.05 as the exponent. It's essentially linear, but slightly non-linear to encourage people to keep power on 1 account rather than to spread to bot armies. You lose approximately 3.5% of your max reward power by spreading out a 30,000 SP account to 2 15,000 SP accounts. I haven't done a million examples of the rest of the math, but that's what it's meant to discourage.