Let's say you are paying $500 a month, and this month you pay $1,000 extra, for a total of $1,500. "Counts towards principal" means you now owe the bank $1,000 less. You still have to make your $500 payments this month and next month, but your loan will be repaid a lot quicker. Every month you pay less interest, because you owe less money, so more of each months payment goes towards paying back the loan.

"Counts towards interest" means your payments are now $1,000 ahead of schedule, so you could not pay any money in the next two months (because you already made these two payments). So you haven't really paid back any additional money, but the bank holds these $1,000 for you and uses the money if you don't make payments. So this is much less beneficial to you. 

Why making additional payment to mortgage counts towards principal? Why does it matter?
If I drive my truck for 30 min with just water in my system, would it be equivalent to just flushing it stationary (the proper way to flush it)? IOW, if I just drive around with a clean water refill in the coolant system instead of keeping the truck in place and then draining, would it be an okay way to flush?
