What is the difference between Application Events and Component Event in Salesforce lightning component?

Hello,

Component events :- are used to do communication between child and parent. They use bubbling and capture same as used in DOM events. A change in a child component can be communicated to the parent component via component event.

Application events :- are used to communicate any change in the component to a broader audience. Any component who has registered for this event will get a notified.