By analogy with a PC
IAP is like installing a new application under windows.
ISP is like when you create a special boot disk and flash your bios.

In general ISP is done with some kind of non-normal magic plug somewhere on the board, where you plug a programming lead.

IAP is nicer, your program asks if you want to upgrade the code and handles the process itself, says thank you and would you like me to run again !

At least thats the theory.....

Steve