Horizon is definitely arcadier than Forza 4. The damage is only cosmetic, so you can't wreck out of races entirely. If you draft or take an off-road "shortcut", it won't void your leaderboard lap time, like it will in Forza 4. There is car modification in that you can tune a car to a specific class by adding upgrades, but you can't go in and micromanage things like tire pressure, gear ratios, or downforce like you can in Forza 4.
If you're a hardcore racer, F4 is the clear choice. If you're more casual, or have friends who are more casual and want to be able to race with them is a less intimidating atmosphere than in Forza 4, or even if you just like racing games of all flavors, Horizon is awesome.