Really, this isn't that difficult to understand. Compare this to OS updates/service packs etc. for PCs.

One is like a service pack (you need to have an OS installed, it only upgrades what has changed, you don't loose other applications, is smaller to download).

The other is like a new installation from CD or DVD. You don't need an OS, it replaces everything (except possibly user data ... depending on what PC OS we are comparing it to, but you will need to re-install applications that don't come with the OS), but is a much larger download.