Both a clone and an image are an exact duplicate of your drive or partition: data, files, software, the master boot record, allocation table, and everything else needed to boot and run your operating system. Should your hard drive fail or become corrupt, a clone or image backup can quickly recover your PC and you can get back to work. But which is the right one for you?
A Disk Image stores the information required to completely restore disks (or their individual partitions) exactly as they were when the image was taken. You can store several compressed disk images on one sufficiently large external storage device, so you can have the option to restore any one of them.
The entire contents of the imaged file system are stored in a full image file. This is a reliable way of backing up your PC, however, repeating the process can be slow and subsequent images can fill your backup media very quickly. After you have created an initial full image, you can create differential and incremental images. These are both quicker to execute than full images and create much smaller image files.
A differential image stores the changes that have been made to the imaged file system since the last full image. Subsequent differentials can be taken, but only one differential and the full are required in order to fully restore the system. This is quicker than creating a full image, however the longer the time between the full and the differential, the larger the differential image file is and the longer it takes to create.
The main difference with incremental images is that they only store file system changes since the last image, either full, differential or incremental. The resultant backup set therefore consists of a full image and a number of incremental images which must all be present in order to restore the system correctly.
Cloning with Macrium Reflect creates an exact copy of an entire hard drive, or specific partitions on a hard drive, to a different drive. Everything on the target disk is overwritten and you are left two identical drives.
This is useful if you are upgrading to a larger hard drive or moving from a large magnetic hard disk to a smaller and faster SSD. When you Clone a hard drive, you can boot from the target disk on the same system with the state of your computer at the time you undertook the clone. But Windows cannot boot from a USB connected drive; this is a restriction imposed by Windows. You can clone to a hard drive installed in your computer or to a hard drive installed in a USB hard-drive Caddy. If you clone your system disk to a USB connected external drive then, to boot your clone the physical disk must be removed from the USB caddy and attached to your Motherboard SATA port.
You can read more about both here: Macrium KnowledgeBase: Backup, imaging and cloning