Differences in Scale vs Differences in Kind
Differences in scale refer to distinctions in the amount of something, i.e., differences in size, cost, speed, efficiency, storage space, and so on. A difference in kind, on the other hand, is a fundamental difference in how the thing operates, how it feels, and/or what its purpose is.
As a differentiator
In order to attain a competitive position, it is necessary to have something proprietary. Peter Thiel writes in his book Zero to One that, in order to attain a monopoly position, one needs to innovate a difference in kind, rather than just a difference in scale. However, Thiel gives the exception that, if the difference in scale is an order of magnitude difference, 10x the next best alternative, then it comes back around to being equivalent to a difference in kind.
In Video Games
One illustration of this concept can be found in video games. this video offers an explanation from a game design perspective.