"Headphones" is a generic term that encompasses a variety of small speaker types that are meant to be worn over or in a listener's ears. Canalphones, sometimes called ear canal headphones or earphones, are a specific type of headphone that is meant to seal the opening of your ear canal to prevent interference from ambient sound. Canalphones differ from other types of headphones in several ways and the easiest way to understand the differences is to know exactly what each headphone type is.
Canalphones fit deeply into a user's ear canal and use one or more rings of flexible plastic to form a seal. This seal helps block out ambient noise -- the main goal of the canalphone design. Audio engineers often use canalphones to ensure that they hear only the sound they are working with. Canalphones can also reduce the risk of hearing damage since users will be less likely to increase playback volume to drown out other sounds.
Some exterior headphones rest on the outside of the ear while others have a foam filled "dough nut" that surrounds the entire ear. Those without the surrounding foam barrier offer the least exterior noise reduction. They are often the least expensive type and may be considered the most comfortable.
Like canalphones, the more familiar earbud also fits into the user's ear. The main difference is that earbuds sit just outside the opening of the ear canal. They are a middle ground between the other types listed. They offer less noise reduction than canalphones but more than exterior headphones. They are also less expensive than canalphones and usually easier to wear.
Deciding on a headphone type is largely a matter of personal preference. Canalphones offer the greatest ambient noise blocking and highest sound quality. However, many consider them the least comfortable and most difficult to properly wear. Exterior headphones and earbuds are less expensive and more comfortable, but deliver lower sound quality.