First, you will see large amounts of traffic in your home harbor (and all other harbors as well); ships moored, ships coming and going, a flotengebleiter to lead you through the friendly minefields and sub nets, and friendly fighters patroling overhead. Inside the dials and gauges are redone to look like they really did. Many of the sound files are changed, using much more realistic-sounding voices and noises. The sea and sky both look better.
Second, enemy behavior is more realistic. Destroyers may be even tougher than they were in the stock game, or they may drive right by without noticing you. Merchants are tougher to sink, and take longer to go down as well. Depth charges are less powerful, having to be closer to you to do damage (this is historically accurate, so don't argue with me:p ). Planes attack in smaller groups but are tougher and deadlier.
Third, there are several optional mods. If you're into hardcore realism you can have it so ships don't appear on the maps at all unless you pass the cursor over them and tag them, and even then it will only say "unknown" unless you mark them with the UZO/periscope. There is an optional graphics mod that makes the sea bottom much more realistic, but it's hard on the PC (which is why it's optional).
Many more goodies I can't remember offhand, but lots of cool stuff.
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