Bitcoin keeps a ledger, Ethereum runs a computer
Bitcoin does one job and does it well: it maintains a shared, tamper-resistant record of who owns how many bitcoins, and it lets people move that value around without a bank in the middle. Every node in the network agrees on the same ledger, and the only thing that ledger tracks is balances of a single asset. That narrow focus is a feature, not a limitation, it's part of why Bitcoin has stayed simple and hard to break for over a decade.
Ethereum starts from the same idea, a network of computers agreeing on a shared state, but generalizes it. Instead of a ledger that only understands 'balance of BTC,' Ethereum's shared state can hold arbitrary data, and its nodes don't just check balances, they execute code. Every full node on the network runs the same programs and arrives at the same results, which means Ethereum isn't just tracking who owns what, it's collectively running software with no single operator.