To me, the biggest difference between Pokemon and Digimon (as far as I can remember from the shows) is that Digimon talk, have motives, and can generally think for themselves. In contrast, Pokemon (or most of them) seem like they're supposed to be more of an equivalent of animals. Additionally, Digimon aren't supposed to exist in the same world as humans; in the show, it was always one or the other crossing over to meet each other, whereas in Pokemon, Pokemon and humans have coexisted for a long time.

Art-wise, I see a lot more two-legged Digimon than four-legged. Even Digimon like Guilmon walk on two legs, despite being based on a dinosaur or something. So, if a Pokemon is bipedal and looks like it's supposed to resemble something that isn't, maybe it's more likely to be called Digimon-like.

But Frost's explanation is better at explaining why fans compare the two constantly.

I have to agree with both Frost and rex09. The natural vs material and simple vs complex arguments are what essentially tell the two apart.

The first Pokemon that came out looked a lot more natural and simple than the detailed toys we see now. Still, the Pokestyle seems to be settling in; at first, if a Pokemon had way too many "appendages" or had a very complex design, I'd call it a "Digimon" or "Yu-Gi-Oh!mon" for fun. Nowadays, though, either I'm getting used to these new Pokemon or they are becoming stylistically similar to each other, because despite their biological gadgets and whatnot, I just can't compare them to Digimon.

Digimon have way too many details and way too many clothing and weapons, or are just too abstract, as Frost pointed out. While some Pokemon are also like that (or try to be like that), the Sugimori style makes it seem like these external things are parts of their bodies, like they are naturally there, instead of feeling like they were "equipped" with those things, like some Digimon (especially their final forms) do. Also, Digimon, even the cutest/smallest ones, have a heck of a brute/realistic/actually monstrous design, while Pokemon, even the weirdest/most brutal ones, feel adorable, like you can have them as plushies to sleep with. For example, I'd totally own a pet Cobalion, but would never have an Agumon near me.

While some Digimon may look like a mess of a design, and that there are over a thousand of them, this transitioning of style never happened, like it did with Pokemon. Digimon first appeared heavily accessorized/crazy, and they still are heavily accessorized/crazy. It was different with the Pokemon team, who are, apparently, only now coming to terms with how they want their monsters to look: toyish.

Nowadays, when I feel a Pokemon just doesn't seem like it fits in (despite Sugimori's best attempts at making it so, with his infamous artwork), I don't call it a Digimon; I just call it weird, like Bisharp (actually, I call Bisharp "Jason"). I guess not even the best art style can save an awkward base design.

This^
I absolutely agree with that one.
Pokemon is a real life animal with a bit tweaks and looks cuter then the real life counterpart, when Digimon, filled with armors, weapons and such things, make them look messy(although it's cool xD).

Pokemon also can be make a cuter 'style', like I saw a Reshiram and Zekrom plushie, looks much cuter, not like their real 'faces'. When digimon... I can only get along with very very cute one, like Botamon.

And, the most important part, Pokemon and humans were already get along since the 'world' made, when Digimon only interacted with 'the chosen' kids.
And Digimon has very complicated evolutionary lines, from like
Hawkmon -> Aquilamon
Hawkmon -> Evolving via many Digi-Eggs
And like....
Digimon A evolves to Digimon B, and can evolves to Digimon C, and both B and C can evolves further into the same digimon, Digimon D. So like that.