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$xoopsModule is the instance of the XoopsModule class that belongs to the module you are currently in.
This means that in the forum, the $xoopsModule variable holds an instance of XoopsModule with the properties for newbb. Usually it is used to get the current module ID ($xoopsModule->getVar('mid') ) or the module's directory name ($xoopsModule->getVar('dirname') )
$xoopsModuleConfig holds the configuration options (those set in xoops_version.php) for that same module.
This means that e.g. with these lines in xoops_version.php:
$modversion['config'][1]['name'] = 'arranger_group';
$modversion['config'][1]['title'] = '_MI_KG_ARRANGER_GROUP';
$modversion['config'][1]['description'] = '_MI_KG_ARRANGER_DESC';
$modversion['config'][1]['formtype'] = 'group';
$modversion['config'][1]['valuetype'] = 'int';
one can afterwards (in that same module's pages, i.e. not directly in blocks) access the VALUE that is set in the module's preferences page with $xoopsModuleConfig['arranger_group]