straight from some opengl specification discussions on opengl.org:
if a driver returns a certain extension in the extension string, say ARB_TEXTURE_3D, then it supports it in hardware (for example, this ext is not on gf2).
a driver CAN implement certain tasks in software, and for support of a modern opengl version it even HAS to. saying that, you CAN gather the glTexImage3D function pointer on a gf2, and you CAN use 3d textures on a gf2. but they are only in software.
all extensions reported in the extensionstring(-s) should be implemented in hardware. an opengl version that gets reported doesn't have to.
when you have opengl 1.4, it means the driver can support EVERYTHING required to render an opengl1.4 scene. it doesn't mean it does everything in hardware.. (like the lovely statement of, i use glMultMatrix to do matrix multiplications, now its in hardware, why does it use 100% cpu power?!)
hope that helps..
its all a bit diffuse in opengl..