What is the difference between white hat and black hat SEO?

White hat seo is where you obey the search engine rules and do not use manipulative methods which would be against their TOS. Basically original content and natural links would be white hat. Black hat is where you disobey any rules which will be productive to your temporary search engine success. Black hats will use any means at their disposal to gain rankings and because of that they tend to get caught after a while. That is why most good black hats recycle domains frequently and keep restarting new ones to keep the money flowing.

Yes you got that right. White hat means following the guidelines as per provided by google and other search engines. While black hat means using unethical methods like link wheel, link farms, hidden text etc to rank well in search engines.

White Hat = SEO According to the rules of Search Engines.
Black Hat = SEO Against to the rules of Search Engines.

White Hat = SEO According to the rules of Search Engines.
Black Hat = SEO Against to the rules of Search Engines.

White hat seo are ethical methods that are used to gain traffic and create backlinks while black hat seo are using unethical methods to achieve high rank on search engines.

Black hat SEO is illegal way of SEO such as spamdexing, attempt to redirect search results to particular target pages in a fashion that is against the search engines' terms of service, whereas white hat methods are generally approved by the search engines.

Black hat and white hat both are good techniques of seo. But the main difference between them is that white hat follow the rules of search engine but black hat does not follow the rules of serch engine.

"White hat techniques give long term good effect but the black hat techniques give short term effect and it can effect badly on our site."

It is just like in life, legal and illegal stuff that you can do for your business.