What's the difference between a facet promotion and an item promotion?
When you publish content to smarttarget meta information such as name, keywords, structure group, folder etc are also published by default (this is also completely extendable).
You can then build faceted navigation based on this information. This is termed 'faceted promotion'
Item promotions are based on relationships between different component presentations, rather than configured facets.
Best way to learn the differences is to consult the online documentation and have a play with the preview area of the smarttarget manager.