Three years and a complete upgrade which itself is now ten years old. Windows '98 was a domestic system which could - at a push- network just a bit. XP is Windows NT 5.0 which followed on from NT 4.0, the commercial networking opposite number to Windows '98.
It was developed because the world wanted and needed networking. I can't believe I'm writing this in 2011.
in simpler terms of what saga said, it is a newer and much more improved version of windows, 98 is now considered extremely outdated and cant do nearly as much.
Simple the difference between the two OS's is file system format, the windows xp is ntfs file format while the windows98 is fat 32, we know already that ntfs file is much better than fat32...