Difference between this module and core Field API?

Field form adds input form elements as field to any fieldable entities such as node, user and taxonomy term to a Drupal site. Extending the capabilities of Drupal 7's Fields in Core by having an additional field type allowing user to include input form as field(s) to their entity's content. It is inspired by Webform module. The big difference between Webform and Field form is that Webform is a node and already a content itself while Field form is a field which is part of the content of an entity.

So...how does this differ from the Field API/UI that's in Drupal 7?? We can already add fields to nodes, taxonomy terms, and users just using field api.

Field form uses Field API to extend the existing field types allowing Drupal user to have fields in his content that accepts inputs from the visitors which is input form field type. Text field, radio buttons, check boxes, select list (single/multi selection), text area and date are the available input form elements for Fields in Core. Submissions are stored in a database and are presented as table using the powerful data presentation feature of the Views module.

In other words.... If you have content type "articles" you can attach a form to that content type saying "What did you think of this article", "What didn't you like". That is a form filled in by the visitor of the site.

The Field API is targeted at the editor of the site (the fields you create under the "content types" are meant for the site owner/author to fill in). This module allows you to add forms which are targeted at the user.

Am I right? (I admit I'm not 100% sure either).

Yes, that's one use case of Field form. And there's a link tab for that article content linking to the submissions of the visitors or users to the questions: "What did you think of this article?", "What didn't you like?".