Itex is for use in a line of text (Inline TEX) while tex is for use for formulae on their own line. There are some differences in layout - for example \sum_1^n renders as [itex]\sum_1^n[/itex] in itex tags and as [tex]\sum_1^n[/tex] in tex tags. If you 'quote' my post you'll see there are no newlines there - the tex tags added them. Things like multiline formulae (e.g. [itex]\begin{eqnarray}x&=&1+2\\&=&3\end{eqnarray}[/itex]) look silly inline, but don't appear to be forbidden.
In summary, if there's a vertically compact way to render something (fractions as a/b, for example), itex uses that and tex doesn't. Tex adds newlines before and after, and itex doesn't. You might want to read the section on inline equations in latex in a latex manual, which will probably go into more detail.