Call it what you want, but they mean the same thing: the world in which the story takes place.
Do you create one out of whole cloth? Or do you set your story in an area you, and readers, are familiar with? Or do you create a hybrid of the different options?
New York City doesn't need to be reinvented, but it can be renamed to suit a fictional world. Sue Grafton calls the town where Kinsey Millhone lives Santa Teresa, but natives of the area know it as Santa Barbara.
I created a town called Citrus Beach. It shares many characteristics with Vero Beach and the surrounding area. I have compressed the geography to suit my fictional needs, but I wanted a part of Florida that was not overly developed as Broward County/Fort Lauderdale and Miami/Dade are.
The good thing about doing this is it's not exactly Vero Beach, but it's close enough that when I need to do some research about something, I can take an easy drive to explore the area and get the information I need.
Do you like stories that take place in real cities, or do you prefer fictional towns?
I'd love to hear from you!