One is tuned for chat. It has that annoying ChatGPT personality. Instruct is a little "lower level" but more powerful. It doesn't have the personality. It just obeys. But it is less structured, there are no messages from user to AI, it is just a single input prompt and a single output completion.

the existing 3.5turbo is what you would call a "chat" model.

The difference between them is that the chat models are much more... chatty - they're trained to act like they're in a conversation with you. The chat models generally say things "Sure, I can do that for you!", and "No problem! Here is". The conversation style is generally more inconsistent in it's style. It can be difficult to make it only return the result you want, and occasionally it'll keep talking anyway. It'll also talk in first person more, and a few things like that.

So if you're using it as an API for things like summarization, extracting the subject of a sentence, code editing, etc, then the chat model can be super annoying to work with.