1. Traditional: These publishers will typically only accept submissions from literary agents. The smaller ones will sometimes let you send your manuscript, yourself. But either way, if they don't like your work, they don't publish it, and you move on. If they do want to publish it, you may or may not get an advance, and your books will appear in bookstores nationwide. These are your Random Houses, your Harper Perennials, and your Little, Brown & Cos.
2. Indie-friendly (whether "vanity" or POD): they print what you send them and you pay to have the book distributed through online bookstores. (There's a little more to it than that, but the point is, there's no acceptance necessary from a publisher to use any of the self-publishing methods. No gate-keeper is stopping you from releasing your book to the virtual shelves.) These are your Lulus, your Xlibrises, your iUniverses, and your AuthorHouses.
Traditional publishers: Pretty books. Quality books. Professional books. Edited books. Good distribution.
Indie-friendly "vanity" or POD publishers: Not really edited (you can opt to pay for editing "services," but ... well ... ). So-so to really bad paper quality and flimsy, curling covers. Little to no bookstore distribution.
It used to be authors had to make a choice...
