When you are marked for distinction, it means you are someone who is going to do well in life. You will set yourself apart from others. Distinction means being set apart, often by excellence.
When things are distinct from one another, they are different. It is the distinctions that make them this way. In your school, an outside observer might at first be unable to see the distinctions among the kids, but with a little time they'll be able to see how kids are identified and associated with their peculiar qualities.