Bah now we're into semantics, but say you're running xpra on display :1. Running an Xnest or Xephyr inside that can't re-use the :1 display. Further, you can run multiple Xnests/Xephyrs inside an xpra session.

I stand by my statement that xpra has only a "rootless" mode, but I will agree that with Xephyr (which is a less-sucky Xnest), there is less of a difference anymore.