Standby leaves the computer and its power switched on, but inactive, in a low power consumption mode; press a key or move your mouse to wake up your system reasonably quickly. You'll find everything as you left it, ready to resume working. Hibernate completely shuts down the computer and turns off all the power. But, unlike a normal shutdown, Hibernate copies to the hard drive the exact condition the computer was in prior to hibernating. That is, the hibernation routine takes a snapshot of the contents of RAM and rolls that onto the hard drive into a file called Hiberfile.sys. As with waking from Standby, when you restart your computer from Hibernate, you should find everything exactly as it was when you closed down. To restart from Hibernate, turn on your computer using whatever button you usually use. Unlike initiating a wake-up from Standby, you can't press a key or move your mouse because the computer is not on.
The advantages of hibernate are that it uses no power (especially valuable when a notebook is running on battery power), leaves no noisy fans running, and (unlike standby) doesn't lose anything even if there's a power failure before you return to the computer and restart it. A minor disadvantage of hibernation is that it requires a moderately large chunk of your hard drive (even temporarily), roughly the equivalent of your system's RAM.
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Problems? See this thread at archive.org.
