What is the difference between Build Active Architecture Only -> No and creating a fat binary by using lipo?

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Let's imagine that we're creating a static library in Xcode and in the Build Settings we set Build Active Architecture Only to No. Why does it still produce a library suitable only for the device currently selected (a simulator or real device)? What do we still need to create a fat binary running a script which would use lipo tool? Why at is the actual difference between these two? What does lipo do that building for all architectures doesn't?

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Shebuka On

When you are Building you are using only one architecture to Debug on, to do a fat library your action of choice must be Archive that also strip all debug info from the final library.

As for why after setting NO it still builds only for currently selected device, check if the Configuration your are editing is Debug or Distribution/Release.