Where humidifiers pump moisture into your air, diffusers push something else entirely into your home's climate. According to Byrdie, diffusers "fill the air in a room with tiny, breathable particles of beneficial essential oils — giving the room a calmer, more pleasant-smelling ambiance." Essential oils are powerful and can alter your mood, so diffusers are actually more powerful than they look. Because of this, you're not just choosing oils based on their smell or throwing money away on a machine that simply smells good, you're investing in aromatherapy.
Outside of the major difference between putting out moisture and essential oils, the two types of machines aren't entirely different. They both use water to create their mist, though their tanks can vary in size, with diffusers' tanks often being smaller because they require less water (via Honeywell). The two products are even being combined now so that you can unleash moisture and essential oils into your homes at the same time. Honeywell's Designer Series Cool Mist Humidifier, for example, functions fully as a humidifier but also contains a tray for essential oils, meaning you can accomplish both goals at once. It can be found on Amazon for $69.99.
Ultimately, both diffusers and humidifiers are great investments. If you can only choose one, humidifiers may be the better option, but both are excellent for your overall well-being.