Actually, there isn't really any rule to this if I'm not mistaken 
. A change in volume or a change in pitch may be called either tremolo or vibrato depending on who's talking. In this case with Mark and his guitar, we're only talking about a change in pitch from either his left hand fingers or the tremolo arm of the guitar. BUT on some amplifiers the change in volume effect is called tremolo, and on others it's called vibrato. I think the confusion stems from the early days of Fender, Marshall and Vox amps using both words for the same effect. 
Right, technically it is clear: a modulation of pitch is vibrato, one of volume is tremolo. Fender did it wrong right from the beginning so today you can call it what you want.
a notable difference between tremolo bar and left hand vibrato :
the hand vibrato can only make a pitch up, while in most of the cases, the tremolo arm can only make a pitch down
(although some rare systems can make a pitch up like on Satriani's guitar for example or on recent strats like mine from 2005)
Fender's (and others) tremolo/vibrato was designed to be used with a floating bridge plate so you can push it down or pull it up. Adjusting it so that it touches the top and can only be pushed down, like Mark probably had on all early Dire Straits stuff, was not the way it was meant to work. The reason is more tuning stability of course, plus the tune of other strings does not go down when you bend a string.
But, my tremolo bar is not blocked, I copied the exact MK1 but did not know about bar blocked
I think it is stated in the MK guitar style books that it is blocked and the fine tuners were why he wanted the FR.
