Increased isoform switching
As shown in Trapnell and Hendrickson et al, gene-level differential analysis is complicated by the presence of substantial levels of isoform switching. When the isoforms of a gene (which may have substantially different lengths) change in relative abundance between conditions, simple counting schemes may fail to recover accurate gene-level changes in expression. Cuffdiff addresses this problem by calculating a gene's expression as the sum of its isoform expression levels, maintaining accuracy even in the face of increased isoform switching.
In this testing scenario, all of the isoforms, rather than just the most abundant, are perturbed by differing (randomly selected) amounts, resulting in isoform switching as well as gene-level changes in expression.