So whats the difference? It's very simple and straightforward... when you encounter understeer. Your car is trying to go outward instead of the inside line. This means that if you are turning left on fast left hander corner, when you're turning suddenly your cars direction starts to move outward. You were aiming at the inside line of the left hand corner, but your car's front end starts to move towards the gravel. To sum it all up, you turn your car, but won't turn to where you want it to turn.
Oversteer is when the back end of your car starts to slide off first causing a powerslide if you can hold it. This is much better than the understeer because you have a chance to correct the error, and sometimes it can lead to a faster time. The overteer is desirable when you're trying to drift because if you want to drift; you start off with the oversteer and then hold the slide for a while and it will be a stupendous drift if you can hold the oversteer for a long time.
Front wheel drive cars tend to understeer alot while rear wheel drive cars tend to oversteer. This will only happen when you push the cars to the limit.