Palit adds 1 or 2 more PCB layers, so that the internal wiring may be accomodated in the shorter length of the card. It also adds another VRM phase for stability and improved OC ability (in most of the cards, that is). Note that it is probably a good idea to add a VRM phase when reducing PCB size and adding layers, because there is a very small possibility of wiring interference. The upside is shorter size and potentially better overclockability. The downsize is potentially higher temperatures since there is less surface area for heat to radiate. However, that is probably why Palit's OC edition cards come with good cooling designs.
(Everything from the above paragraph other than the first two sentences is not 100% verified fact, but conjecture based on my own experience with designing PCBs for electronic applications).
Palit saves on certain ICs for voltage control, etc., adding a simpler version that still allows fine tuning via NVIDIA's driver API but not using any other API. This saves money, but still allows for good overclocking potential.
The good thing about Palit's cards is that almost all Palit cards (recent ones, 400/500 series) have 100% Japanese solid capacitors. *Very few* other brands can boast this across what seems to be their entire product range, low end to high end. Palit sometimes have quirky designs (read about heat issues on the GTX 560 cards), but I would give them +1 for quality any day.
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