Talk:Dedicated Server/@comment-11273298-20130626002653/@comment-3157150-20130721125600

Dedicated in this case means that there is a dedicated Executable file running the server, and as such it is separate from the Terraria game itself. This means people can be on your server's world while you aren't, something that "Host and Play" doesn't support. That last sentence is the fundamental difference in the case of Terraria.