It might seem to be a little bit tricky at the beginning to remember the difference between them, but you'll learn it super quickly.
FOLDER consists of a few galleries. For example 'Spain' folder consists of two galleries - one from Madrid and one from Barcelona.
GALLERY is always a collection of single photos. Following the previous example - gallery from Madrid consists five photos from trip to this beautiful city.
Note, that you can also put folders in another folder. You can create folder 'Spain', than place in it a folder 'South Coast' that will be containing galleries from Malaga and Almeria.