FDM (Frequency Division Multiplexing) divides a channel into non-overlapping frequency ranges and allocates a range to each signal, while TDM (Time Division Multiplexing) divides a channel into time periods and allocates periods to signals in turn. TDM provides greater flexibility to adjust bandwidth dynamically for different signals, while FDM has less latency as signals can transmit at any time. Both FDM and TDM are commonly used together, with FDM first dividing a channel into smaller frequency ranges that are then divided into time periods using TDM to accommodate more total users.