These are transformers where the construction electrically separates the input supply from the output by an insulation barrier. Commonly this type of transformer is used to convert the supply voltage to a different voltage level to suit the supply requirements of particular equipment, i.e. step-down or step-up. However 1:1 ratio transformers may also used to take advantage of the transformer isolation properties.
These are transformers where the input and output are electrically connected as part of the same windings. The physical size of these transformers is smaller than isolation transformers of the same power rating and therefore they are cheaper, however they only prove suitable for certain applications. Protection of the equipment is still predominantly dependant on the supply distribution devices. Commonly they are used to convert supply voltages for similar systems e.g. a 240V UK supply to a 230V European supply..