In the study, 50 readers were given the same short story. Half read the 28-page story on a Kindle, and half as paperback. Afterwards, participants were tested on aspects of the story including objects, characters and settings.
The researchers found that "The Kindle readers performed significantly worse on the plot reconstruction measure, for example, when they were asked to place 14 events in the correct order."
As an explanation, the authors refer to the tactile properties of paperbacks. "When you read on paper you can sense with your fingers a pile of pages on the left growing, and shrinking on the right. The differences for Kindle readers] might have something to do with the fact that the fixity of a text on paper, and this very gradual unfolding of paper as you progress through a story, is some kind of sensory offload, supporting the visual sense of progress when you're reading."
The authors suggest that publishers should make evidence-based decisions about what kind of content is best presented in what kind of format.
More details on the study here: http://www.theguardian.com/books/2014/aug/19/readers-absorb-less-kindles-paper-study-plot-ereader-digitisation