Sellers will sell their products to end-customers by themselves using Amazon's marketplace. Additionally they may use Amazon's fulfillment service (FBA). In this program the products belong to the seller until they are sold.
Vendors will sell their products to amazon, who then sell it to the end-costumer. Here the vendor basically acts as a Supplier to Amazon - once Amazon buys the products, the products belong to them and all marketing measures are basically in their power. The Vendor program can only be joined by invitation from Amazon.