So I am having trouble working out what, specifically is the difference between these two.
As I understand it, a snapshot is simply a backup of the disk drive, where
There are two types of AMIs (and corresponding instances):
instance-store (sometimes called S3-based). These are less common and I don't recommend them for beginners. An instance-store AMI is a copy of the root instance-store volume plus some metadata, all saved in an S3 bucket in a special format
EBS boot. This is probably what you are using. An EBS boot AMI is an EBS snapshot of the EBS root volume plus some metadata like the architecture, kernel, AMI name, description, block device mappings, and more.
You can take a snapshot of an EBS boot volume and turn it into an EBS boot AMI by registering it with the appropriate metadata. The trickiest part of this is specifying the correct AKI id (kernel) so that it boots correctly.