Many times people assume that bug and defect are same terminologies. It is not, really!
In general practice bug is something which is still in control and not having high impact on desired outcome, whereas defect is complete breaking of requirement or desired outcome.
For example, say there is a signal along with automated barrier which takes care that while train is running on rail-track, no one should walk or drive through it.
If the signal and automated barriers are working fine but with minor gap still exist in complete locking of barrier at testing cycle - we can still say its a bug. It is going to be fixed before Go-Live. In case after Go-Live installation, if the signal and automated barrier is not working that efficiently to indicate and restrict others not to cross rail-track during train is running on it, its a complete defect.
Bug: It is the problem found in software which causes the software to perform in unintended manner. During the testing process if tester found any problem in software which causes software not to work in its required manner then it is generally called Bug.
Defect: Generally it is the problem found by the customer at their end while using delivered product. Defect occurs due to mistakes in code or requirement document which causes deviation from actual result which is expected. Defect is the problem found by customer as the time of production.
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