Short answer: Android Automotive OS runs natively in the car, while Android Auto runs on the phone and can be projected to the car over USB or Wi-Fi.
Android Auto
- Runtime: Runs on the phone, displays on the phone or projected by the
phone to the car
- App architecture: App developer extends mobile app, all user setup
happens in the mobile app
- UI: Google's Android Auto app draws every UI pixel, everything is
optimized for driving
Android Automotive OS
- Runtime: Android OS runs on the car, phone is not required
- App architecture: Developer deploys an APK specifically for the car,
all user setup happens in the car (parked UI)
- UI: Google, the OEM, and the app developer draw UI, some screens are
optimized for driving
- Developers create the setup / login / settings UI for the car (parked
UI)
- Google publishes source code for an AOSP media UI (OEM takes
responsibility of driver safety, not Google)
- OEMs make adjustments to the media UI to fit their screens (driving
UI)