Methods in Python are functions that are associated with an object or class. They can access and modify the object's attributes and are invoked using dot notation. Functions are independent blocks of code that can accept inputs, perform computations, and return results without being tied to a specific object. The key differences are that methods are associated with objects, can access object attributes, and modify object state, while functions are standalone, cannot access object attributes directly, and are not associated with a particular object. [/SUMMARY]