Widgets and plugins are used to customize your website. Both widgets and plugins, like themes are installed using the WordPress Dashboard.
What is a Plugin?
Plugins are third party pieces of software you are able to install and use on your WordPress website. Plugins are typically developed to add additional functionality to your website that is not included in the standard installation of WordPress. Some examples of plugins are image galleries, contact forms, and banner rotators.
What are Widgets?
Widgets are sort of like plugins, but they provide a way to arrange your sidebar content without having to alter your actual code of your website. Widgets can be a calendar, search bar, or many other types as well.