When u compile a program using command line, u add the references using /r switch. When you compile a program using Visual Studio, it adds those references to our assembly, which are added using "Add Reference" dialog box. While "using" statement facilitates us to use classes without using their fully qualified names.

For example:
if u have added a reference to "System.Data.SqlClient" using "Add Reference" dialog box then u can use SqlConnection class like this:

System.Data.SqlClient.SqlConnection

But if u add a "using System.Data.SqlClient" statement at the start of ur code then u can directly use SqlConnection class.

On the other hand if u add a reference using "using System.Data.SqlClient" statement, but don't add it using "Add Reference" dialog box, Visual Studio will give error message while we compile the program..

Hope this is enough for you.