When the narrator is a storyteller who isn’t part of the story.
A limited third-person narrator reveals the thoughts and feelings of only one character. It’s as if the storyteller is perched on one character’s shoulders and can see inside the character’s head.
An omniscient (all knowing) third person narrator reveals the thoughts and feelings of several characters. It’s as if the story teller can fly around, seeing what goes on everywhere, and looking into several characters’ minds.