Say you have your screen showing the nav map on the left and entertainment details on thr right. When you get near an intersection the arrow display (or lane assist if the nav has the data for that particular street) will temporarily replace the entertainment details. If you had the map in full screen mode it would temporarily go to split screen with the arrows on the right. I have no idea what happens if you use iPod out in conjunction with the nav.
And just to clarify "iPod out" refers to the special BMW apps feature that displays the iPod's interface on the nav screen (but takes over the entire screen in the process). Even without this feature you can still plug I and control your iPod using idrive. But the interface is bmws slightly clunky search filter interface.