A decoder and a demultiplexer serve different functions in digital circuits. A decoder converts binary input signals into a unique output line, while a demultiplexer takes a single input and routes it to one of several outputs based on select lines. Both components are crucial in applications like data routing and signal processing. The discussion highlights the importance of understanding their distinct roles for effective circuit design. Overall, recognizing the differences between a decoder and a demultiplexer is essential for anyone studying digital electronics.