There is a large amount of confusion these days as to the distinctions between Adware and Spyware. When you begin to include other forms of "wares" to the equation things can get even more complex. For instance, the word Malware just makes thing that much more puzzling. At the end of the day, the outcome is a lot of confusion and a little fear in regards to seeing anyone of those terminology.
Example number one:
Imagine you download software off of the internet. A lot of the occasions you can get software that is completely free. The only catch is that it is going to show advertisements whenever you use the software. This is how the software's maker is going to make their cash so they can afford to just give things free. Now whenever you launch the program you see little sign ads within the application, but otherwise the ads don't show up in any inconvenient way.
Example number two:
In this example you'll download software from the net. The software is free as in the preceding example. For all intents and functions things will appear very similar. You are even notified very clearly that the ads will appear. The problem is that ads turn up in ways you never actually expected. They come up even when you aren't using the software you downloaded and the ads happen to be disturbing and bothersome.
Example number three:
Here is where you don't really mean to download any software at all. Or, you download something but aren't alerted in any way that you will be getting advertisements on your display in any form. Still, ads start showing up whenever you use your computer. Sometimes you exit out of them and they just come back. You try to stop them by uninstalling them however you can't find out any way to do it.
All of those instances deal with adware. It's software that is designed expressly to show banners on your screen. Inherently there is nothing actually wrong with this and as said in the first example it's often something that you accept. Regrettably, as with the second example, it's often something that provides more than was assured.
The latter two examples mean what is known as malware. Adware is not always malware and vice versa, but the two are often bundled together. Malware is essentially software that executes on your computer in a malicious manner. In some situations, as with the second example, it is simply a nuisance, but in other positions it can actually lead to a lot of destruction.
As for spyware, well, that can actually exist in any one of the above mentioned examples. Spyware is any type of software that follows things that you do on your computer. For the most portion it is malicious. That said, in some cases the kind of software stated in the first example will openly express that it uses spyware, while it will say so with softer words.
In its less harmful manifestation, spyware simply watches what you do in terms of websites you go to. It then uses that information to send you the most suitable ads. In its more detrimental incarnations spyware can track more personal details than that, and can even send intruders information about your passwords etc.
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