Essentially, during a Caucus, registered voters of a particular political party gather to converse and attempt to persuade their peers to vote for their respective candidates. Voters are grouped off depending on whom they intend on voting for.
If a candidate lacks a certain percentage of voter support, they are asked to join one of the other candidates' groups. After debating has subsided, each person openly makes his or her endorsement. Some caucuses proportionately award their delegates, while others have a winner-takes-all approach.
Sen. Barack Obama has been successful in the caucus states primarily because they tend to reward campaign organization and voter passion, which his campaign has been known for.
A primary is generally what comes to mind when you think of the election process. During a primary, for a specific allotment of time, voters of all political affiliations secretly vote for their candidate of choice. There are no party restrictions and registered voters may vote for whomever they decide at that moment.
The primary system was devised to combat the voter fraud that had become prevalent in some caucuses.
Ultimately what distinguishes a primary from a caucus is anonymity, or lack there of $
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