Yes there are differences, but the ISO I downloaded is made for a system and there is no reason why there shouldn't be controls like setting log size, overwriting older logs for new ones. Hardware is not that much of an issue surely. I would be happy to set a log size to what my hardware can accommodate while someone else could choose what fits them, including "memory only logging"
I think the limiting hardware being discussed is the suitability of m0n0wall for near-line storage, like USB drives, CompactFlash cards, etc. that can wear out quickly with constant writes, which log files like this can do. With the option for running off a CDRom and holding the config on a floppy, there really is no good provisioning for storing a log file.
I think the lack of option of storing one locally is to keep someone from accidentally turning it on or forgetting to turn it off and wearing out their storage.
m0n0wall isn't meant to be a large enterprise class routing solution, there are other BSD and Linux based router offerings that might fit better for such a solution. (Not to say that m0n0wall isn't as stable and secure as many enterprise class routing solutions, just possibly not as featured.)