The main difference between water-based and oil-based undercoat paint is the type of solvent used. Water-based paint uses water as a solvent, while oil-based paint uses a petroleum-based solvent. Water-based paint is eco-friendlier, dries faster, and is less likely to emit strong fumes. However, oil-based paint is more durable and resistant to wear and tear. It's important to note that some states have regulations on the use of oil-based paint due to its potential environmental impact.