The basic difference
An annual completes its entire life cycle — germination, growth, flowering, seed production, and death — within a single growing season. A perennial lives for three or more years, dying back in winter and returning each spring from established roots.
Biennials are a third category: they grow leaves in their first year, flower and set seed in their second year, then die. Foxglove and hollyhock are common examples.
Annuals
Annuals are the plants that gardeners replant every year — zinnias, marigolds, cosmos, petunias, basil, and most vegetable crops. Because their goal is to flower and set seed before dying, they often bloom prolifically and for a long season.
Annuals give you flexibility. You can change your garden's color palette and content each year. They're also often the fastest way to fill space and create an abundant-looking garden in a single season.
Perennials
Perennials come back year after year, growing larger over time. Coneflowers, black-eyed Susans, hostas, daylilies, and ornamental grasses are common examples. The first year a perennial is planted, it focuses on establishing its root system — you may see modest growth. By the second and third year, the plant matures and begins to perform.
There's a saying among gardeners: the first year they sleep, the second year they creep, the third year they leap. Patience with perennials pays off in a garden that fills in and becomes more beautiful over time without annual replanting.
Designing with both
A garden that uses both annuals and perennials benefits from the best of each. Perennials provide structure and continuity from year to year. Annuals fill in gaps, extend the season, and let you experiment with color and variety without long-term commitment.
A good approach when starting a new bed is to establish a foundation of perennials and fill the spaces between with annuals while the perennials grow in.