Jay, Mod.2 comes with a fiber optic front sight. Grip zone is an improvement over the feel of the old xd. Trigger guard is undercut. Allows for a better grip. It has a slightly thinner profile over the older model. Slightly lighter. It's a more refined product. A very good run down demo of the differences is here : youtube.com/watch?v=K4-1oxwOoR0

The MOD-2 guns have fiber optic front sights, redesigned/better grip, thinner undercut trigger guard, and overall the gun is slightly lighter and more narrow. Magazines are all still compatible between the two also, just not XD(m) magazines.