Label Encoding involves assigning a unique numerical label to each category in a categorical feature. For example, converting categorical labels like "low," "medium," and "high" to numerical values 0, 1, and 2.
One-Hot Encoding converts each categorical value into a new binary column and assigns a 1 or 0 to indicate the presence or absence of that category. For example, converting categorical values like "red," "blue," and "green" into three separate binary columns.