Training modes in Zwift
Using ERG mode in a Zwift workout means your trainer will hold you to a particular wattage, literally forcing you to work at a particular level. Check out these links for more information:
All about ERG mode in Zwift (article)
Sim mode is simulator mode. This is the mode used in all Zwift activities other than workouts. In Sim mode, the controlling software (Zwift) sends parameters like rider weight, air density, Crr, gradient, and wattage to your trainer. The smart trainer then tries to replicate the "feel" of that virtual ride environment through its resistance on your drivetrain.
Incline mode is a simulation of a steady-state climbing grade; it applies a steady and consistent resistance to the trainer, just like climbing a hill.
Watch the video below for Coach Tim's discussion of ERG, Sim, and Incline modes.