Is there a difference? You bet.
Etiquette is a code of polite conduct based on social acceptance and efficiency. Just as there are traffic laws to create smooth transportation flow and prevent collisions, so there are societal rules designed to facilitate positive human exhanges and reduce conflict. When you know the rules of etiquette for any given situation, it increases your comfort, confidence and competence, and by extension, the ease and comfort of people around you.
For example, once you know the rules of table settings, you won’t have to wonder and worry which bread and butter plate is yours, or which fork to use when in the course of a meal. That keeps the focus of the meal where it should be: on the relationship.
Understanding the “why” behind the rules, helps people buy-in and practice the protocols. Consider why a name tag is worn on the right instead of the left, for instance. That’s because it’s easier for others to see when you shake hands. As each person extends the right hand, the line of vision naturally follows past the length of the arm and hand to the placement of the name tag, which is on the person’s right.
Manners are polite behaviors that reflect an attitude of consideration, kindness and respect for others. You may not have been taught how to make proper introductions, but a kind person knows better than to belittle or embarrass another person in public or private. A well-mannered person also remembers to say “Please” and “Thank you” and refrains from interrupting others in the middle of a conversation.
I think of the difference between the terms this way: etiquette provides the form or structure within which good manners operate. Both are integral to effective human interactions. It is important to know what to do when, but as Jimmy Stewart’s character reminds us in the movie Mr. Smith Goes to Washington:
“I don’t care at all about all your rules if they don’t have any kindness behind them.”