What is the difference between an on-board VGA port and a VGA port provided by the video card? Is it possible to have an extended display using one VGA port from on-board and one from the video card?
Not much at all - its just the output for some video device. However, many motherboards, especially older ones use the same PCI-E lane for both integrated and external graphics - if so you won't be able to use both at once - see this answer for details on that.
Newer systems, especially those with on-package video processors, such as the intel sandy and ivy bridge as well as AMD APU based systems shouldn't have this issue since they don't use the external PCI-E bus to for communications between the IGP and the rest of the system.