I think that's about it. It's obviously important that the light is spread evenly inside and there are a few different ways of doing that, but the end result is the same.
The main purpose of having the flash head actually inside big softboxes like the Elinchrom 6ft Octa is to make them shorter front to back. They are so huge even in a big studio. Maybe it helps with even diffusion but like I say, that can be achieved in other ways. It also creates a shadow spot which has to be diffused away some how, so I'm far from convinced by that argument. There is also the other difficultly, when using a monoblock, of having the flash controls hidden away inside - so you really need a remote control system.
Even big softboxes are often surprisingly efficient in terms of power. Obviously they spread light over a large surface area, plus absorbsion from various surfaces, but if you use any flash at a little distance the natural spread goes over a wide area anyway, so the difference is not as much as you might think. Having said that, don't stick a hot-shoe gun in a 6ft octa - the light will just get lost.
Smaller ones are quite workable though if you don't expect miracles - bear in mind that if you double the diameter of the light, the area is increased four times. That's two stops, or the difference between 200ws and 800ws. BTW I think the biggest hot-shoe guns are about the equivalent of 60ws, so roughly two stops down on 200ws. Look at that another way, and it's the difference between 100ISO and 400ISO, or f/5.6 and f/11, so there are ways around it. I think the biggest problem with hot-shoe guns for portraiture is not power but slow recycling.
It's a Rotalux Octa 135 http://www.elinchrom.com/products.php?p_id=76#content 
