One has to dig into the history of WordPress to completely understand the difference. Way back when Matt Mullenweg and Mike Little forked B2 CafeLog and made an awesome CMS called WordPress. Little did they know then that it would power almost a quarter of all the websites on the internet in 10 short years. They wrote WordPress under the GPLv2 and made it free to the world. Still to this day the WordPress files are free and will always be.
WordPress.org is completely ran by volunteers to build a better WordPress. Anyone is able to volunteer at WordPress.org and help in a various of ways. On the WordPress.org website is tutorials, free themes, free plugins, and support forum which all are updated often. All themes and plugins are tested before going on in the repository which gives consumers peace of mind that they are getting a quality product. If a vulnerability or malaria is found on a theme or plugin, the core contributors who oversee the respected repositories will remove them until they are patched and able to be downloaded again. Since there are many eyes looking at products on WordPress.org, information is found out quickly if there are changes that needs to be made to core, themes, and plugins.
In August of 2005 Automattic was founded by Matt Mullenweg. Automatic is the company behind WordPress.com, the hosted version. WordPress.com is a free and premium web hosting platform that uses the WordPress.org CMS. Automattic does volunteer out some of their employees to work on WordPress.org for updating the core files, plugin and theme development and testing, and community involvement. Automattic has also built plugins and features for both WordPress.com and self hosted websites such as Jetpack and Akismet. There will always be a free version and a higher paid version at WordPress.com that users can choose if they want to go that route.
Which WordPress is right for me?
By having two choices of WordPress many do not know which is better for them.
WordPress.com is free to get started and free hosting. Once can pay for premium services or a custom domain. The free service the domain defaults to www.yourdomain.wordpress.com. While using WordPress.com is very inexpensive or free you are limited to what you can do. There are a select number of widgets and themes available. Plugins are not available for WordPress.com at this time. One large advantage of using WordPress.com to host a website is all updating is done by them. One does not have to worry whether the site is on the right version or if the plugins have security releases. Everything is done at the company level instead of the user. WordPress.com is great for beginner bloggers, a place to collect and share your thoughts, or for children wanting to learn WordPress.
If a more custom site is wanted it is best to download the core files from WordPress.org, choose a hosting company ( I recommend SiteGround) and either build it yourself or hire a designer to build it for a price. Using the core files from WordPress.org is also referred to a “self hosted” site. This is because the website is hosted on an external server from WordPress. The sky is the limit on what can be built on a self hosted website. While the options are limitless, the webmaster has to update, add, and delete from the site manually. If updates are not made a self hosted website can become a target for a malware infection. There are many companies, designers, and developers who can help keep a self hosted website running beautiful and smoothly.
Many large companies like Time Magazine and Sony Music are built with WordPress. It powers almost one-quarter of the internet at this time and is continually growing. No matter which choice fits a website better, sites are always ran better on WordPress.