Well I dont quite understand it fully either. But they do make their own laws even if they are almost identical to UK laws in many instances. In many cases they shadow UK laws. Evidently the UK has a big influence, as in the visa malarky where the UK has a large say in the acceptance or refusal of Spouse or Fiancee visas. I just posted a bit on ILR today and you will see similarities and differences with the UK ILR. But then there already are similar kinds of differences between England and Scotland already. The Isle of Man is dependant on the UK in a way that I could see, by contrast, Scotland being more self supporting if Alex Salmonella takes it to the ultimate conclusion.
IOM has its own government . There is a bit in wikipedia on it but it doesnt really make things particularly clearer.