The "desktop" version is purchasable as a boxed CD or a downloadable installer, and is installed on your own computer.
The online version runs off Turbotax's servers and can be accessed from any web browser as well as smartphone apps.
See below for more.
Turbotax online is a different product from Turbotax Desktop (which comes as a download or CD to install on your own computer). They have different prices and different capabilities. The key differences are:
1. Most Turbotax desktop products include one free state module. With turbotax online, each state is $35 extra. (With turbotax desktop, e-filing a state return is an extra fee in most states, but it is still cheaper in the end than the online product. Or, you can avoid the fee by mailing your state return.)
2. Turbotax desktop allows direct access to all forms and worksheets. This is good for troubleshooting, error checking, and making manual adjustments in rare cases where they are needed. Turbotax online hides the forms and worksheets, and only allows you see them after you pay. The worksheets and forms are never directly editable.
3. Turbotax desktop version Deluxe and higher all include schedule C for self-employment, schedule D for investments and schedule E for rentals. The higher priced versions have more help and support, but the forms are available in the lower priced versions if you know what to look for. With turbotax online, you must upgrade to Premier or Self-Employed to get those forms.
4. With turbotax online, each tax return requires a separate user account and password and will charge the full price. Turbotax desktop can prepare an unlimited number of tax returns, with e-filing allowed for up to 5, all for the same initial price for the CD or download. (Each state e-file has a separate e-filing fee, but you can avoid that if you prefer to mail your state return.) Each return is in a separate document like having different Word or Excel documents. This allows to you prepare test returns for tax planning, or to prepare returns for family and friends (use of Turbotax by paid preparers is a violation of the license and of IRS regulations.)
5. Turbotax online can only be purchased directly from Turbotax. Discounts are not always available and the price goes up the closer you get to April 15. Turbotax Desktop can be purchased as a download from several discount retailers (like Staples and Amazon) and the CD can be bought from many more (including Target, Walmart, Costco, Best Buy); and usually at a significant discount compared to the Turbotax direct price. (But avoid web sites you've never heard of, they are probably selling pirated or infected copies.)
I only recommend Turbotax Online for people who qualify for free filing. Otherwise, the desktop version is more cost-effective and has more capabilities.
