I am trying to understand tor and Im confused about one thing. If one modifies a conventional web browser to use tor, does this give access to .onion websites? Seems that the browser would still not be able to resolve the .onion domain suffix. If true, then what is the purpose of trying to add the tor feature to a conventional web browser? If only for anonymity, then how does this differ from using a VPN?
To modify a conventional browser just involves changing its proxy settings to use Tor as a SOCKS proxy. Tor Browser has a number of other security enhancements and anonymity features, but at the very basic level it can communicate with the Tor controller and the browser proxies everything using SOCKS.
When proxied through Tor SOCKS, it will transparently route .onion addresses over the Tor network to the hidden service destination and back if it is available. When accessing regular internet sites, Tor can resolve the DNS, bypassing your local DNS, and proxy your traffic through an exit relay.
It's different from a VPN in the way it routes your traffic to the destination. With a single VPN alone, your traffic is potentially one hop away from your destination. If the VPN is being monitored or is subverted, it could be possible to see your unencrypted traffic, or at least know what IP addresses you may be communicating with. VPN traffic might be more detectable, require the use of special software, or be more complicated to set up in general.
Since Tor traffic is encrypted with TLS and there are thousands of potential entry points, and roughly 1000 exit relays as of today with an additional random hop in between, your traffic is potentially more difficult to trace back to you without massive or very targeted surveillance.
The Tor Overview and Hidden Services pages can be helpful to read too.
Hope that helps.