The transformation of the Austrian Empire into Austria-Hungary dates from the 'Ausgleich' (usually tranlated as 'Compromise') of 1867.
In 1866 Austria suffered a disastrous defeat at the hands of Prussia and was in effect expelled from Germany. There was a danger that the Hungarians, who had rebelled in 1848-49, might again rise in rebellion against Habsburg rule. (That said, negotiations for some kind of autonomy for Hungary had been in progress before the war of 1866).
This vast empire (the second largest state in Europe - after Russia) disintegrated in 1918.
It was in the middle of Europe: where Austria and hungary are located now. It does not exist any more. Austria-Hungary was a country from 1867 to 1918. The Compromise of 1867 brought them together and they established a Dual Monarchy in which they shared power over the country and had two separate parliaments.
The Austo-Hungarian Empire (aka Austria Hungary) was a union between the Austria Empire and the Kingdom of Hungary, as a result of the Austro-Hungary Compromise of 1867. They were a joined constitutional monarch, similar to the Canadian government; the monarch of the Queen of England is purely symbolic.
Austria-Hungary is now a historical term. It used to be a country ruled over by the Habsburgs. The Habsburgs had always had a lot of problems with the Hungarians as they never gave up their rebellions for independence. So, in 1867, they made a compromise and this way a dual monarchy called Austria-Hungary. (One monarch, two countries, two capitals, two parliaments, and some common things, for example the ministry of defense or ministry of finance.) This big formation fell apart after the First World War in 1918.
AUSTRIAHUNGARY
Fourteen Points 1.Open diplomacy 2. Freedom of the seas 3. removal of economic barriers 4. Reduction of armaments 5. Adjustment of colonial claims 6. Conquered territories in Russia 7. Preservation of Belgain sovereignty 8. Restoration of French territory 9. Redrawing of Italian frontiers 10. Division of AustriaHungary 11. REdrawing Balkan boundries 12. Limitations on Turkey 13. Eastablishment if an independent Poland 14. Association of nations