Gamer scores and Microsoft Points explained

Gamer scores: earnt by playing, used for bragging. Microsoft Points: bought with cold hard cash, used to buy stuff. If that's not enough information for you, check out this article by IGN, which delves into the difference. Amongst the highlights:

• Gamer scores and Microsoft Points are and always will remain separate
• Microsoft Points can be used, and obtained, in flexible ways, but it's up to developers to take advantage of this
  
• Live Arcade games have lower gamer scores available because they're meant to be casual (though tell that to our friends at Joystiq)
• Game designers work out how to allocate gamer scores
• Gamer scores are unlikely to be used as currency to buy extras for games, since that would alienate the less hardcore players