Solution
The difference between the Sound and Vibration (S&V) Toolkit Waterfall Graph and the 3D Graph Waterfall is that the S&V Waterfall Graph is natively compatible with other S&V functions.
The main advantage to using the native S&V graphs is that no extra conversion is needed for manipulating the data and graphs. This makes it much easier to use with the rest of the toolkit.
The 3D Graph Waterfall requires you to convert the data into the 3D waterfall datatype using Plot Helper (Matrix) VI. An example is available in the NI Example Finder by navigating to Help>> Find Examples... and searching for Waterfall. There you will find the 3D Waterfall Graph.vi, which shows how set up a Waterfall 3D Graph.