Both iPods and MP3 players can play back digital audio files in the MP3 format. Some MP3 players play other audio formats, too, such Windows Media or Ogg. The iPod doesn’t support Windows Media, but it does support AAC, the format of songs purchased from the iTunes Store. Many non-iPod MP3 players don’t support AAC.
So, in the most basic sense – the ability to play MP3s – the iPod and other MP3 players are the same.
The bigger difference comes in what else the iPod can do that a standard MP3 player can’t. Probably the biggest difference is that the iPod touch can run programs from the App Store. No MP3 player can do that.
Generally speaking, iPods are a little more expensive than comparable MP3 players, but they also have more features. That in a nutshell, answers the question “what is the difference in a iPod and a MP3 player?”