Matter refers to any physical substance that occupies space and has mass, while material is a specific type of matter that is defined by its properties and intended use. The discussion highlights that matter is a broad term encompassing all substances, whereas material is more focused, often associated with particular applications like explosive or corrosive substances. Participants emphasize the need for clear definitions to distinguish between the two terms, suggesting that material implies a purpose or functionality that matter does not inherently possess. The conversation also touches on the importance of context in using these terms correctly. Overall, the distinction lies in the specificity of material compared to the generality of matter.