We are happy to consider your stories whether they are submitted as competition entries or standard submissions. There are no reading fees for standard story submissions. On the other hand, the monetary award paid to competition winners is more substantial than the already tidy $700 payment for accepted standard submissions, and agents seem to be on the lookout for competition winners. (Awards help agents sell work to ever-hesitant publishers.) Competition entries are automatically considered for the standard category as well as for the competition to which it is submitted.
From our perspective, competition submission judging is more complex because stories must be compared against one another as well as being considered on their own merits, but it's fun for us, and reading fees do help keep Glimmer Train alive and well. (Even after seventeen years, we still put money into the business every year, as we suspect all independent litmags do.)
Bottom line: ALL stories are read and appreciated and considered for publication by the same diligent readers either way. So relax and choose the category that suits you.