What's the difference between a search engine and a directory?
–Searching in Scarborough?
Search engines and directories are both tools people use to find information on the Web. The difference is in how they get and organize their information.
Search engines use little programs called spiders or bots that scour the Internet, follow links, and bring back this information to the search engine's index. When you use Google you're not actually searching the Web, you're searching Google's index of the Web. Search engines use complex algorithms to determine which Web pages are most likely to answer the questions you pose and return these pages on the search engine results pages (SERPs.)
Directories, by contrast, are human-powered. Site owners submit their sites to directories (sometimes for a fee, sometimes free) and human editors determine the value of the site and whether it should be included in the directory. Directory visitors can search the director or drill down to the appropriate category, i.e., Arts & Humanities > Museums, Galleries & Centers > Modern & Contemporary.
Although directories have fallen out of fashion (even Yahoo's directory is now hidden at Yahoo.com under the “more” tab), there are still benefits to being listed there. Being listed in an important directory helps your search engine visibility because it counts as an incoming link, which is one of the variables in the search engine's algorithm.