The difference between the two terms is that the Pre-Qualification letter is issued without verification of information and Pre-Approval starts with the buyer providing written documentation of all information provided. While neither is a considered to be a mortgage commitment, nor a written mortgage guarantee, obtaining a Mortgage Pre-Approval letter is more preferred than obtaining a Mortgage Pre-Qualification letter.
For example, Pre-Qualification is a process where a buyer contacts a Mortgage Lender/Mortgage Representative, often on the telephone, who then asks the buyer to provide some information. The information requested involves a current address and how long living there, a social security number and permission to order a credit report, annual income and hopefully the amount of down payment.
After the credit check is ordered and received by the Mortgage Lender, the Mortgage Rep then estimates the amount of mortgage the buyer can afford and sends (via fax or email) a letter to the buyer with the title You Are Pre-Qualified, for a mortgage loan in the amount of $..... and a purchase price of $.....  This is usually done shortly after the initial phone call, and can be described as an estimate of potential mortgage ability and purchasing power, and not Mortgage Pre-Approval.
A pre-qualification letter always includes varying type disclaimer information, such as: Subject to a formal mortgage application and payment of an application fee, subject to verification of employment, subject to verification of assets, subject to credit review, subject to mortgage underwriting guidelines, interest rate to be the prevailing rate of interest for the mortgage type applied for, among many other "subject to"-like statements.
Certain problems may arise when a formal mortgage application is submitted by a buyer after they've obtained a Mortgage Pre-Qualification letter. Although the buyer has provided correct information, there may be circumstances where even though the verbal information provided is accurate, certain other details are not mentioned which may have a negative impact on the mortgage approval process. Such circumstances may include, details like down payment being borrowed (not gifted from a family member), undocumented income and inconsistency in work history.
In regard to process in providing a Mortgage Pre-Approval, many Mortgage Lenders require a more thorough process. In addition to obtaining a credit report, many Lenders require the buyer to provide proof of two years of work history, pay-stubs or income tax forms, copies of bank statements for source of funds verification and copies of charge card statements. Once the documentation is provided, it is then submitted to the Mortgage Underwriter for review and approval.
Once Pre-Approval is received, the buyer and Realtor will have confidence in a price range and obtaining final mortgage approval.  In submitting offers, sellers will know they have a serious buyer who has been proactive, and arranged for mortgage financing. Also, the buyer will be more relaxed in providing earnest money deposit, spending money on due diligence, paying for the mortgage application and appraisal fees.  
Pre-Qualification versus Pre-Approval, although these terms appear to be similar, they are really quite different.