What is the difference between differed processing mode and interactive mode?

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Every time you access and navigate through the fields on a page in PeopleSoft there are events such as Field Edit, Field Insert, etc... that get triggered.

For example if I am on a page and enter a letter in a numeric field, the field edit peoplecode can fire (to check if the value is valid) when I tab out of that field. When you turn Deferred processing on, the field edit peoplecode will be ignored until you press the save button on the page.

Interactive mode means that the peoplecode will fire immediately when you tab out of the field. Some pages have intensive peoplecode field edit's on them and turning deferred processing on can save a lot of time when you are doing data entry

There is no need to make the whole component interactive if you need a field interactive … simply untick the "Allow Deferred processing" on the field you want to respond interactively:

As Praj has already indicated, processing modes follow a bottom-up approach from Page-Fields to the component. If a component is using deferred-processing mode, pages and fields within that component can be made interactive on an individual basis (by unticking the "Allow Deferred processing" box).

However, if a component is interactive, then all pages and fields on that component are interactive as well

http://docs.oracle.com/cd/E28394_01/pt852pbh1/eng/psbooks/tapd/chapter.htm?File=tapd/htm/tapd11.htm