This debate didn't start with the Gaon, but is earlier. You can see the history here. Hopefully this paragraph from there will make it clear enough.
If the tzimtzum narrative is taken at face value (tzimtzum ki'pshuto) then the created reality is analogous to Leonardo’s sandwich; G‑d created the world and very much cares about worldly events and human actions, but G‑d’s essential self is in no way embodied or invested in such goings on. In the analogy, Leonardo was very hungry, and he really liked cream cheese; peanut butter and jelly really would not have gone down well at all. But none of these facts are in any way relevant to — or expressions of — Leonardo’s essential genius. In the analog, the utter transcendence of the divine self remains entirely absent from the created realm even as divine supervision is exercised therein.
As long as someone doesn't come along and try to claim that he means G-d gets hungry, ר"ל.
See also here.