Functional components in React are JavaScript functions that accept props and return JSX. They are simpler to develop and focus solely on presenting UI.
Class components in React are JavaScript classes that accept props and maintain internal, private state. They contain a render() method that returns JSX.
Functional components are easier to write, understand, and test. They are stateless by default and use hooks for managing state. Class components are better suited for complex logic and have access to lifecycles.
In modern React, functional components are preferred due to their simplicity, performance, and the availability of React Hooks for handling state and side effects.