The latter gets their name from the phrase that some use: "writing by the seat of their pants." As in, they glue their butts to a chair and go for it.
What some people will fail to tell you is that there is no "one" way to write a novel. Sure, people will try to sell you different kinds of writing processes, and there's definite pros and cons to both ways. The problem is that everybody's mind works differently, so their creative process is different, too.
Personally, I'm a panster. I've tried numerous times to plot before hand, but nothing ever happens. I need to be in the middle of the action in order to figure out what happens next, because it helps me create a more natural flow from one scene into the next. The furthest I'll go into pre-planning is to have a general direction: a character starts at point A, then X needs to happen, followed by Y, and eventually they need to get to point B.
Sometimes there's as many as 10-15 k words between each of those points.
Others, however, like to have a more concrete set of directions. It keeps them organized and it keeps them on-track. I have a number of friends who create outlines, either for their entire novel as one or even as detailed as chapter-by-chapter. It works for them, so I can't really tell them it's wrong.
Okay, I'll stop just jabbering. Here's a small list of pros and cons for each method, and keep in mind that these are my own observations. Also, I might be a tad biased:
Pros: keeps you and your plot organized; gives you a sense of direction (i.e. you always know what happens next); it enables you to develop more of your characters and setting before you begin writing; while you write, the probability of getting stuck goes down
Cons: the structure makes it difficult to stray from the outline and explore other plot options (some people "marry" themselves to their pre-writing plot lines and feel guilty about wanting to try something else)
Pros: enables you to act with spontaneity; less structure tends to set the creative juices free; you can dive right into writing as soon as your ideas hit you, instead of forcing yourself to slow down
Cons: less structure makes it more difficult in the later stages of writing your novel, which allows for the chance of losing steam or getting writer's block
That's the most comprehensive list I can come up with, and I assure you that there's more pros and cons to both options. What it all boils down to, though, is finding what works best for you in order to keep you writing in a way that makes sense to you.
Even if you're a pantser, though, keep in mind that notes are good. If you get a scene in mind, write down the basic concept for it. If there's details you need to keep track of, write those down. While I've already admitted to being a pantser, I like to make use of excel spreadsheets in order to keep my characters in order. I also enjoy index cards to help me order or re-order my scenes.
Find what words best for you, and never let anybody tell you that there's a right or a wrong way to do things. That would be like telling an artist that there's a right or wrong way to paint a picture or design a sculpture.
And that would be weird.