Cajun's got it right but he'res some more.
An incremental backup stores all files that have changed since the last FULL, DIFFERENTIAL OR INCREMENTAL backup. The advantage of an incremental backup is that it takes the least time to complete. However, during a restore operation, each incremental backup is processed, which could result in a lengthy restore job.
A differential backup contains all files that have changed since the last FULL backup. The advantage of a differential backup is that it shortens restore time compared to a full backup or an incremental backup. However, if you perform the differential backup too many times, the size of the differential backup might grow to be larger than the baseline full backup.