I've read the manual and everything and still can't figure out exactly what the difference is. Right now I'm filming something at work without a shotgun or external mic, and I just want to capture the audio through the onboard mic on the dvx. What settings should I use?
If you're only using the onboard mic, it makes absolutely no difference what the mic/line switches are set to--they apply only to the XLR inputs.
The "mic" setting is for microphone-level audio sources such as (you guessed it) microphones. The "line" setting is for line-level audio sources such as many large-format audio mixers. (Line level is a much stronger signal than microphone level, so a line-level source would overload a mic-level input, and a mic-level source can't be heard on a line-level input).
The analogy is like the flow of water. Think of line level as a fire hose and mic level as a garden hose. But in your case, the setting doesn't apply to the onboard mic.