chrisandchris described it perfectly. I will just add some additional info. (Funnily enough my name is Krisz :) so you will have info from chrisandchris and Krisz ;))

VFR is the type of flying everyone starts at first with, and then later in your training you learn IFR.

There are generally 3 big “problems” a pilot has to solve. They have to keep the plane flying straight and level, they have to keep from hitting things (other airplanes, terrain, buildings, etc), and they have to get to where they want to go.

The two types of flying differs in how these 3 big goals are achieved.

With VFR you look out the window and see if the horizon is level, and that you are not sinking or ascending to keep level and straight flight. You sometimes crosscheck this with your instruments but the windscreen and your vestibular system is your primary instrument. You avoid flying into things by what is called “see-and-avoid”, which is exactly what you imagine. You see things and you avoid them. You use your radio to be aware of other airplanes around you, but your primary means of avoiding them is still the fact that you see them and steer away from them. And finally you get to where you want to be by looking out finding landmarks and flying to your destination based on that. For example you might spot a river, or a big road and follow it to your destination. This is what we call visual flight rules, or VFR for short.

This is all great and very intuitive. But the problem is that none of this works if you can’t see out of the airplane! And that happens more often than you would like. Fog and clouds and mist and darkness has caused many accidents before more advanced piloting techniques were developed.

So what do we do if we can’t see? We fly using the instruments in our cockpit, and this process is called instrument flying rules or IFR for short.

You keep the airplane straight and level by scanning the instruments and integrating what they say in your head and reacting accordingly. This is harder than it sounds. One tricky thing is that your inner ear in the absence of visual inputs lies to you! You might feel you are ascending when you are actually banking . The other tricky thing is that there is a certain amount of lag on the airplane’s reaction to your inputs and there are random noises like tiny gusts of wind, so if you yank the controls every time you see the instruments change immediately then you yourself might induce oscillations in the airplane. And then you react to those oscillations and if your reactions are in phase things might get worse and worse. So you have to learn to not do that, and also to trust the instruments more than your own internal sense of orientation. Which is very non intuitive and therefore hard.

Then you also have to avoid hitting things. The way you avoid hitting cranes, buildings and terrain is by flying above a certain minimum altitude. As you might guess this minimum is higher where the ground is higher and lower where it is lower. And then you also have to know about tall towers. There are maps which advertise how high you have fly to avoid hitting obstacles at any point. Avoiding other airplanes is harder, so you use the help of the air traffic control. They clear you to fly certain directions at certain elevations and they make sure every airplane they control stays far away from each other.

And of course both of these depend on you knowing where you are and where you are heading. Having a map of minimum safe altitudes is nice but if you don’t know where you are it is near useless. Having clearances is nice, but if you don’t know which way you are flying they won’t help you. So you use a compass, and radio navigational instruments to keep track of where you are.

This is a lot of hard work and you have to do all of the above and more simultaneously at the same time and without major errors. So if you are not good enough at each of them you might become what is known as “task-saturated”. Too many things to do and keep all in your head. Or if you are not processing all of this in your head fast enough your internal representation of what is going on with the airplane and around the airplane might lag behind reality. This is also known informally as “flying behind the airplane” which is for obvious reasons very dangerous. So IFR is much harder than VFR, but also because it is less about your internal feelings and your ability to look around it is also much easier to simulate in a simulator. This is the reason why it is generally recommended to start with VFR training in a real airplane, while in the later IFR training simulators can play a bigger role.