Okay, quick crash course on shoulder injuries.
There are two major joints in close proximity toward the shoulder. The first one is the acromioclavicular (AC) joint. The second is the glenohumeral (shoulder) joint.
In layman's terms, a separated shoulder involves the end of the clavicle (collarbone) separating at the AC joint. There's only ligaments (connective tissue) that keeps that joint together, so stretching or tearing it can cause the joint to separate.
A dislocated shoulder involves the top of the humerus (the upper arm bone) dislocating from the glenoid fossa (socket that hold the humerus). There's a much greater chance of serious injury and effects here because it's not just connective tissue, there's also cartilage, nerves, arteries, and muscle that services the immediate area as well.
A shoulder separation may be painful, but a dislocation may involve an emergency room visit. In some cases, it can be months or years before it finally heals because of the proximity of major nerves that service the arm.
This chart shows the degrees of a separation. A dislocation would involve the joint right under the affected area here (what looks like a white sphere).
