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What is the exact difference between Target type and publication target types...

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As Nuno explained in this question: its main reason is abstraction.

What you can set on Target Type and not on Publication Type is security. For second, you have have multiple target types that point (publish) to same Publication Target which gives you more flexibility with it.

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    Furthermore, in SDL Web 8, the concept of Publication Target has been removed (well, deprecated). That simplifies things a bit, but you get a new concept in return: Business Process Type. – Rick Pannekoek Mar 17 '17 at 11:26

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