Substitution (subst:) and transclusion are both ways of copying information from one place to another.
Subst: copies item X – a page title, the entire contents of a page, whatever – and pastes it at insertion point Y, and then disappears, leaving item X behind at insertion point Y. The use of subst: is not apparent from the edit history or source code. If item X is later changed, place Y will not change.
Transclusion copies everything from page X to insertion point Y and updates Y indefinitely with any changes made at X. The source code and edit history at insertion point Y shows ‘’only’’ the template; the edit history and source code are at page X. Although it may seem like you're editing at Y, you're actually editing at X and it's being transcluded.