What is the difference between netbook and notebook?

Netbooks (as you've already spotted) are cheaper to purchase.

Netbooks have less processing power, mainly powered by the Intel Atom 1.6GHz (or similar) CPU.

Frequently Netbooks will come equipped with both a Hard Disk Drive and Solid State Drive in the same chassis.

Netbooks are smaller physically with screens in the 8" to 10" size.

By and large (no pun intended) the Netbooks are designed for use on the 'Net, making use of any Cloud Computing that's available. They tend to perform better while online - offline their lower processing power becomes more evident.

Initally, Netbook were all powered by Linux but XP made some inroads as time went by. Microsoft are anxious to now point out that Netbooks will be capable of running with the lower hardware requirements of Windows 7. (I'd rather see that before believing it).

I think of netbooks as Internet appliances. There core function is to allow access to the Internet and not much more. If all you do is email and web browsing, a netbook might be enough.

If you look at the specifications for a netbook, you will understand why they are a cheaper than a full notebook system.

All netbooks have low end CPUs, limited RAM, very limited hard drives, and much smaller screens.
While nearly all have USB ports, many do not have built in DVD drives.

Some use a limited version of the OS (Windows Mobile) rather than a full version of Windows or Linux.

If ALL you need is email and basic Internet access, then, a netbook might be enough. However, if you need to install applications or need a lot of performance, then a notebook is a much better choice.

Chas