Normally, a car has a distributor to send timed electrical pulses of electricity to the spark plugs in an IC engine.
However, in many drag racing applications, I see a similar gizmo called a magneto.
Internally, what makes one different than the other, and why is that so important in drag racing?
Well, for one, an alternator was never best friends and then mortal enemies with a bald guy in a wheelchair. 
My based on no facts whatsover WAG (assuming it’s more then just a difference in name) is it possible the dist has a vacuum advance and the magneto has something different, maybe some sort of magnetic advance?
Okay, so poking around it has nothing to do with what I said. It was something to do with giving a hotter spark and higher RPMs. Something about having it’s own coil.
I couldn’t find enough info to really understand, but that’s what I got out of it.
If I remember correcly, a magneto is a distributor and an alternator and an ignition coil in one — i.e. you spin it on one end and it gives you spark on the other. A regular distributor is just a timing mechanism that allows the ignition coil to fire powered by the alternator/battery. Magneto allows ignition to work without an alternator or a battery.
Exactly - alternators only purpose is to charge the battery - and battery can be removed, lessening weight if a magneto ignition is used. The distributor (call it a “dizzy” to be hep.) is still used in some manner for timing afaik. Racers are only running their engines for relatively short runs. They probably don’t have a full tank of fuel, either?
How Stuff Works on magnetos. They are electrical generators that produce the spart directly.
A distributer is a device that distributes the spark to the cylinders. the spark being generated from the battery by a set of breaker points and an ignition coil. The latter is a transformer that increases the spark voltage from the battery voltage up to that voltage required to produce the spark in the spark plug.
With a Kettering ignition system (what most cars had from the 40’s through the 70’s) energy is stored by using the battery to charge the inductance of the ignition coil through the primary winding. The energy is stored in a magnetic field. When the points (or transistor equivilent) open, the collapsing field drives the coil’s secondary to high voltage.
A magneto charges the coil’s magnetic field directly, using a moving magnet. A primary winding is still used, but the points just short this out, rather than connecting it to a battery. The changing magnetic field causes current to flow in this winding exactly like the Kettering system. When the points open this current stops flowing, and the collapsing field again generates the spark voltage across the primary.
Magnetos are nearly universally applied to small (lawnmower) engines due to simplicity, and light aircraft to insure the engine remains functional even if the entire electrical system fails. When complex control of spark timing is required for economy and emissions control though, a magneto system becomes even more complex than a Kettering system.
Top Fuel dragsters inject so much fuel that they will hydraulic lock if the ignition system fails to ignite the charge. Thus extreamly powerful ignition systems are desireable. With a magneto, this power can be supplied by mechanical means, which the engines have plenty of, rather than electrically, which would require a heavy battery. One drag racing rule of thumb is that saving 7 lbs of weight is equal to adding one HP…so a 50# car battery costs about 7 HP.
I am compelled to add that IME drag racers tend to deeply understand, and trust mechanical things, and tend to less well understand and trust electrical things…thus less wiring is seen as a very good thing. Considering that swapping an engine on a top fuel dragster is a routine operation, fewer wires to connect would be an advantage.