Microsoft Windows is an operating system produced by Microsoft. In fact, they have a series of operating systems under this name (i.e. Windows XP, Windows Vista, Windows 7,…).
Linux is technically a kernel. A kernel is the central component of many operating systems. However, we are mostly comfortable in using the word Linux to refer to the full fledged operating systems that are built with Linux kernel. Such are correctly known as Linux distributions. Some popular Linux distributions include Ubuntu, Fedora, SuSE and Debian. Linux was originally written by Linus Torvalds in 1991.
The main difference between Windows and Linux distributions is that the source code of Linux distributions is freely available. Anyone can download Linux source code and customize as required and new derivatives of Linux can thus be created. This has resulted in thousands of Linux distributions.
During the past, Linux was predominantly used by computer scientists and advanced users who loved the freedom and the flexibility of Linux. Windows was predominantly loved by the business users and other computer users in general. Since the early versions of Windows, it showed more user friendliness due to the simplicity of use and the availability of widely used graphical user interface applications. Both Windows operating systems and Linux distributions have continued to evolve. As of now, graphically rich Linux distributions are used even by the layman computer users. Windows has also moved from being a “desktop” operating system to provide network infrastructure services where use of Linux was dominant during the past.
Windows and Linux use different executable file formats and also have significant differences in their kernels. This results in application software written for Windows not to run on Linux and the vice versa. For example, Microsoft Word cannot be run on Linux. However you can run OpenOffice Writer which is an open source “Microsoft Word like” word processing application both on Windows and Linux since the creators of OpenOffice Writer offer different versions of their software for Windows and Linux.
To use Windows operating systems, you need to purchase them. But most of the Linux based operating systems are freely (i.e. no money involved) available. There are however many Linux distribution creators who charge for the services (but not for the software) that they offer. For example, RedHat is such a company.