An applique quilt is constructed totally differently than a patchwork quilt. With a patchwork (or pieced) quilt, different pieces of fabric are stitched together at the edges, and the more pieces you put together, the larger the quilt becomes. You are, in essence, creating the cloth top of the quilt one little piece at a time.
An applique quilt is somewhat more fussy to make. With applique, you start with a background fabric. Then, following patterns you have purchased or designed yourself, separate designs are cut out of another piece of fabric (normally colored fabric); those pieces are then appliqued or sewn on to the top of the background fabric. An applique quilt can be a two-color quilt, as in the blue and orange photo you see below, or it may be constructed of many different fabrics in many different colors.
The following are all examples of applique:
You can also combine patchwork (piecing) and applique in the same quilt, as seen here in “Floral Star of Bethlehem.”