Difference between $1 vs %1 in .htaccess

What is the difference between %1 and $1 in .htaccess?

For example,

    #  to remove www  
    RewriteCond %{HTTP_HOST} ^(\w+)\.mydomain\.com [NC]

    RewriteRule .* http://mydomain.com/%1 [R=301,L]    
    #    versus
    #    RewriteRule .* http://mydomain.com/$1 [R=301,L]

I have been using Dave Child's .htaccess cheat sheet and Jackol's .htaccess cheat sheet as well as the Apache mod_rewrite docs but additional help would be great.