Thanks for the topic.A web directory is a home of links whereas the link farm is a farmhouse of links.In a link farm the links are not separated by categories.In link farm anyone can submit links and there is no editorial review of links.These links have been built for the one and only purpose of manipulating the search engines and not designed for the end user.So finding links from link farm is difficult.Directories are helpful to the user in that if a user wanted to find a link under a particular category, it would be easy to go to the suitable category and decide from the selection of links.The links in a web directory are categorized well and quickly sorted out.This is the main difference between these topics.

Web directories have been going up faster than new search engines these days. More and more webmasters are starting to realize the benefits these "directories" may have on the overall promotion of your site or your clients site. The great part is there are many good directories out there. Consider it the "Golden Age of Web Directories" with so many to choose from you could spend all day submitting to them.
Yet, with all these new directories, does this mean they actually represent quality sources to obtain a link from? I have seen a lot of specific niche directories and large directories go up recently, and honestly I have been pretty disappointed with the construction, quality, and usefulness of them. I wouldn't pay nor dare submit my link to some of them. Most to those that look like they took 15 minutes and a cup of coffee to set up.