Annualized Federal Tax is especially handy for commissioned employees because they get a lower wage, but then every so often they get a big payday when their commissions are paid. The taxes are normally figured per each payday as if the employee earned that much every week. The result is that commissioned employees end up paying substantially more in taxes (which they get back on their tax return). However, most would like not to leave that money with the government to get it back once a year.
The Annualized Federal Tax looks at how much the employee has made thus far, and evens out the taxable part, so such a big bite isn't taken out. By the end of the year, their withheld taxes are much closer to what they owe.
Additional taxes ups the amount of taxes to be collected doing this with annualized would mean the total each pay period and the total deducted would be a higher number. So it does not seem like something someone would want to do unless they normally end up having to submit additional taxes at the end of the year.
You can have some employees set to calculate Annualized Federal Tax and other to calculate a regular tax.
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