I can say as a Christian in the southern USA that I have been to churches who use praise and worship music and churches that use gospel music. I know the difference from my background in music, so I am going to answer it from that standpoint rather than from any theological standpoint. Someone with a degree in Divinity can handle all the other stuff if they choose to. Inevitably, people are going to say that I am stereotyping because I am not representing “their,” church, but here it is.
Praise and worship and gospel music are similar in their message of Christianity. They both can focus on praising God’s name, His work, telling the person’s testimony, or stories from the Bible. They can both have any tempo, or texture. They can have any instrumentation of combination of vocals. The main thing is that they worship God and spread the message of Christianity in a general sense.
They are different primarily in the church culture in which they are used. For years, I went to a primarily African-American church, and their main form of worship was gospel music. The music utilized a full choir, a live band with keyboards, drums, bass and guitars. The music varied in tempo but often got faster in time and had a call and response element from soloist(s) and the choir. This musical style is best compared to rhythm and blues. There was often key changes by half-steps upward to build excitement as the music went on. There was also heavy participation from the congregation. I performed in the band and sometimes the choir, and when we toured various locations and saw other churches they also performed in a similar manner. This is gospel music as I came to know it in the American south.
I was raised in a church (primarily Caucasian) who did, “Southern Gospel Music,” meaning a style similar to country music from the 50’s and 60’s in the USA. The music often had personal testimonies and were done with either CD accompaniment, or a guitar player. Sometimes the songs were traditional baptist hymns (known in both Caucasian and African-American southern churches) sung as solo songs in a country style. Sometimes a whole choir sang songs from the hymnal straight out or in a country style. It is called “Gospel,” because that is a word that means “good news.” Both of Gospel and Southern Gospel are called “Gospel,” and rightly so, but they are not the exact same style. I knew it depended on the culture of the church I was going to, as to what I was going to hear.
The final type of music is praise and worship. I went to a Christian university and was introduced to praise and worship music there as I attended church services and convocation 3–7 times per week. For praise and worship in this setting, the music is often in the style of pop or rock music. There is a live band with guitars, bass, and occasionally a piano player. Sometimes praise and worship meant 4 and 5 part harmony singers doing pop or upbeat country style medleys of existing hymns or new songs. I often felt that praise and worship set the tone for church service.
Looking at all of this music from just a theoretical sense is maddening. I happened to be studying music theory at the time I was learning new praise and worship songs and that church culture, and I drove myself crazy realizing that I could play 20 different praise and worship songs with the exact same chord progression. Wasn’t this cheap and easy music writing? Wasn’t gospel music putting on an act by just going chromatically faster and higher? Wasn’t “Southern Gospel Music,” just a rip-off of country music? Didn’t God deserve more than what these music styles entailed? Those were questions I struggled with for some time. Then I realized, it’s not about the formula of the music. It’s imperfect people describing (or attempting to describe) perfection and something close to their heart. At the end of the day, if it reaches your heart, it was worth it.