The most succinct way to describe the difference between pathgrid and navmesh is so:
Pathgrids lay out where you must walk.
Nav meshes lay out where you can walk.
And most importantly...nav meshes lay out where you
can't walk.
Watch a cuddly bear who tries to play with my character. Unfortunately he seems to be afraid of water:
http://www.youtube.com/watch?v=c6zfVzIKtgg
What you see in this video doesn't happen exclusively near water, it also happens a lot on rocks and generally when standing on exterior objects without proper nav meshing. I've seen this in dungeons as well (though not as often).
I've modded a tiny bit for Fallout (made three small mods right after the GECK was released) and I know how the nav meshes work (or better not work). When I made my Ghoul Massacre mod, which has a small worldspace, I navmeshed the place. And at the edges of the map at first I forgot a tiny space (less than a foot width). And guess what? The ghouls weren't able to get there, even though it was a flat, open area. That's what I mean with 'strictness'. If there is no navmesh, even if it's only a tiny, tiny bit of space not covered, actors won't be able to get there. Naturally this creates a lot of problems in a huge world - you can't make sure every single surface is covered perfectly by a nav mesh. And that's why I dislike the system so much. Sure, it looks better and more natural how actors move since they can calculate their path on the whole nav mesh and are not restricted by going from path node to path node. But that doesn't matter if the AI often acts stupid because of a missing nav mesh.