What is the difference between Product Assets and Reference Entities in Akeneo?

Solution

TLDR: Product assets are meant to represent images/videos/documents and files in general. While the reference entities are a way to link objects to products (colors, materials, etc).

Here are the main differences between assets and reference entities:

In 3.2 and bellow

Product Assets:

hold files (images, documents, videos, etc)
are not flexible
vary by channel and sometime by locale
can be categorized
product attributes (asset collection) cannot be localizable nor scopable

Reference entities:

represents an object (color, fabric, supplier)
with flexible properties
that can be linked to products

In 4.0 and above:

Product assets have been totally revamped and are now really close to reference entities with a lot of improvements:

transformations
naming conventions (to guess properties from other properties)
product link rules (to automatically link assets to products)
media links to be able to load images, documents and video from outside the PIM