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
An AMI can be created using a snapshot. For example, using a single "snapshot" you can create multiple AMIs, say one PV and one HVM AMI using the same snapshot.
So, snapshot has the system / OS data. AMI is (snapshot + machine/hardware metadata).