What is difference between pneumonia and bronchitis?

Much: Bronchitis affects the airways and is usually viral in causation. Pneumonia affects the lung tissues and may be caused by a wide variety of organisms, is far more dangerous than most cases of bronchitis, and more complicated to treat appropriately.

Where infection is: Bronchitis is an infection of the larger air passages leading to the lungs, while pneumonia is an infection of the lung tissue itself. Pneumonia tends to be more severe, more likely to cause more severe infection and impaired lung function. Bronchitis is not usually associated with impaired lung function unless there is an underlying lung disease ( COPD etc). Initial symptoms are similar for both.

Location...: Acute bronchitis is due to an infection of the airways whereas pneumonia is an infection of the lung parenchyma itself. So, the major difference is the location of the infection in the lungs.