I have a car that uses Android Auto and one that has Android Automotive built-in, so I can speak to the differences. Android Auto is essentially a way to have your Android phone run certain apps in the car's head unit, regardless of what system is actually running in the head unit. Android Automotive OS (AAOS) is the actual Android OS installed in the car. It is the car's operating system and the OS that is used to run the entire car. You do not need an Android phone or any other phone, for that mater (the phone is only used for calls and messages, via the car's Bluetooth).
Just like with Android phones, where the manufacturer customizes the Android OS to its own device and each brand runs a slightly different "flavor" of Android, car manufacturers also customize the OS to their cars quite a bit.
AAOS does have the play store built-in (since it is part of the OS). In fact, if you have a car running AAOS and log into the car using your Google account, the car will appear in the play store as one of your Android devices, along with your phone and whichever other Android devices you might have. So, in theory, you could go to the play store and install any Android app you want. In practice, however, there are two reason why this is not the case. First, Google needs to approve your app to use within AAOS, and the number of apps approved to run in AAOS is still very, very small, although new apps do show up every now and then. I assume that at least part of the approval involves making sure it is safe to run the app in a car (not only in terms of driving safely, but since the OS is running the entire car, they probably need to make sure the app would not cause problems in the OS that could lead to a safety issue with the car). Now that more auto makers are starting to install AAOS, I hope Google will somehow expedite these approvals and increase the number of apps available.
The second reason, however, is that the manufacturer also restricts what apps they allow on their version of the OS. This makes the number of choices even smaller! In my case, for some strange reason the manufacturer decided it would block the Android Auto receiver app, which is what would allow Android Auto to run in the car. So, even though the car is an Android OS, I cannot use Android Auto instead of AAOS. Ironically, the car does have Apple Car Play, so my wife, who has an iPhone, has a much better experience in the car than I do.
As it stands now, perhaps the only real benefit of AAOS is that it is independent of my phone. I don't need to connect my phone to the car (other than via bluetooth if I need to make calls). The integration with Google Maps also works really well (specially for planning trips with charging stops if you have an EV), and you can use the Assistant to operate the car (e.g. control the HVAC, ask the assistant in your house or phone to warm the car, lock the car, etc). But to be honest, if I had the choice, I'd probably be using Android Auto, just because of the very limited app choices in AAOS.
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