Online applications are meant to be similar to web applications. You run the app, but when you close it, it’s gone. Installed applications are meant to be closer to traditional client applications. In terms of actual differences:

• Installed applications get entries in the Start Menu & Add / Remove programs. Online-only apps don’t.
• Installed applications are locked in the “ClickOnce” store & can only be removed by uninstalling the application. Online-only apps can be aged out of the “ClickOnce” cache.
• Online-only apps always check for updates when they are launched, installed applications can be configured to check for updates at different times.