Originally posted by GregK8 I believe the EV for flash simply adjusts the flash output without the camera knowing or caring, thus applying additional light to the scene. If you use the EV on the camera, I guess the camera could adjust aperture or sensitivity depending on what mode your in, which might not do anything if the flash is the only light illuminating the scene.
Yep, the flash compensation (accessed through the fn menu, flash settings) will increase and decrease just the flash output without changing the picture's exposure. You would use it for example to lower the flash output if you just wanted a touch of light for fill flash.
The camera ev setting will adjust shift the entire exposure EXCEPT when in manual mode. Then the ev compensation will adjust the flash output upward and downward. I find it easiest to shoot (when I use flash) in manual mode to get control over both aperture and shutter and then use ev compensation on the camera to get the correct level of flash to make the shot.