The ditch is the side of the piecing without the seam allowances. I was always taught that stitch in the ditch is a line of stitching just a few threads to that side of the seam, with color matched thread, and virtually invisible. The idea is that by stitching in the ditch, you avoid having to go through the additional 2 layers of fabric that are from the seam allowances.
I'm not fond of stitch in the ditch, and I will do almost anything to avoid that type of quilting. It's actually one of the most demanding methods-- if you're even a few threads off, it can look bad, and any wobble or deviation calls attention to itself. A more free form, doodling style of FMQ is far more forgiving -- who's to say what a swirl or a petal or leave should do? Ditch stitching is not really up for creative interpretations.