What is the difference between replicated storage and server storage?

The difference between ReplicatedStorage and ServerStorage is that ServerStorage does not 'replicate'. This means the server doesn't tell each player about what's inside it.

As a result, LocalScripts cannot use anything in ServerStorage (ServerStorage doesn't exist to them).

Anything that a LocalScript needs should be in ReplicatedStorage. Everything else should be in ServerStorage.

ReplicatedStorage is to duplicate to all clients when needed to but ServerStorage is well, for the server (everyone will see/have it).

ReplicatedStorage and ServerStorage are similar because they are both used to store objects that are not needed yet in the game. Maybe a developer is testing something out and wants to put his other item aside to be used for later. The item will be considered nonexistent in the game.

ReplicatedStorage is used for developers to store items that are accessible by both the client and the server until the stored item is needed.

ServerStorage only allows the server to access the items inside of it.

For example, if someone buys a gamepass and you want to give them an item, you could have a Script in ServerScriptService give the item to that person whenever they join the game. You could place the item in either ReplicatedStorage or ServerStorage because the server can access both. Both services (ReplicatedStorage & ServerStorage) will still do their job by keeping the item out of the game because you don't want people who didn't have the gamepass, to see it in their backpack.

However, if you want someone to take a shortcut and click on a GUI in the game which will prompt them to buy the gamepass, you will have to use a LocalScript in the GUI to do so. Then if they buy the gamepass, you have the option to continue using the LocalScript to give them the item. But if you store the item in ServerStorage, that won't work because LocalScripts cannot access items in ServerStorage. You would have to store the item in ReplicatedStorage in order for the LocalScript to access it and place the item in the player's backpack.