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AM is an abbreviation for Amplitude Modulation, while FM stands for Frequency Modulation. Both are ways of transmitting information that can be decoded, usually into sound for radios.

Basically, a wave has two properties that can be changed - amplitude and frequency, as you might have guessed. Amplitude describes how big a wave is. Larger amplitude sound waves are louder, and larger amplitude light waves are brighter. Frequency describes how long it takes a wave to repeat itself, and is the distance from one peak, the high point of a wave, to another peak; or from one trough, the low point of a wave, to another trough.

Amplitude modulation means changing amplitude to encode information. All AM radio stations use this. It generally encodes less information than frequency modulation, producing a lower quality sound. As a consequence, AM stations tend to be Talk Shows. Also, the range of AM stations is much larger than that of FM stations.

Frequency modulation means changing frequency to encode information. All FM radio stations use this. It usually encodes less information than AM, and can therefore produce a better quality sound. As such, FM stations are generally used to transmit music. The range of FM stations is lower than that of AM stations.

The easiest way to tell the difference between AM waves and FM waves is the frequency. AM waves tend to be low frequency for radio, while FM waves tend to be much higher. You might think that FM waves would be hard to pin down, but the change in frequency is not very large, so that different stations don't interfere with each other.

There is a lot more information on the subject, but this is a quick introduction.

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