The fundamental difference between aerobic and anaerobic respiration lies in oxygen usage. Aerobic respiration requires oxygen to produce energy and results in carbon dioxide and water as byproducts. In contrast, anaerobic respiration occurs without oxygen, often leading to the production of substances such as lactic acid or ethanol, depending on the organism. Aerobic respiration is more efficient, yielding approximately 36 ATP molecules per glucose molecule, while anaerobic respiration yields only about 2 ATP. Thus, the presence or absence of oxygen is crucial in determining the efficiency and products of the respiration process.