It’s actually not that difficult to understand. The reason why it turns out confusing, I think, is because they really do provide two levels of complexity, but essentially does the same thing.
MIDI is what currently dictates the situation of these two types of tracks, i.e. Instrument Track and MIDI Track.
MIDI has three things called Ports, Channels and Events. On each MIDI Port, MIDI Events can be sent on sixteen different MIDI Channels. (I am referring to MIDI Events as being notes, pitch bender and controller data, for now.)
A MIDI Track has a choice of one Port (virtual or physical) and a choice of sixteen Channels.
(This track type can talk to external instruments or VSTi.)
An Instrument Track has a choice of VSTi.
(This track type automatically use a single virtual Port and a single Channel to communicate with a VSTi.)
As can be seen here, the difference really is that from MT to IT the traditional concept of MIDI Ports and MIDI Channels has been removed altogether. This is why it is easier to use an IT, since the most basic concepts of MIDI communication are absent.
On the other end of either of the track types is an instrument which is either a one-sound-at-the-time or a multi-timbre device.
Ports and Channels are probably more interesting to people like me, that have used and are still using external synthesizers and have already learned how MIDI works. Some people also prefer to continue using VST instruments in this way, even though that is generally not necessary.
HALion 4 is a good example of a VST instrument that can function as both. It has the capability of receiving MIDI Events on many Ports and Channels from one or more MIDI Tracks, but also functions great on an Instrument Track.
There are however lots of VST instruments around that works like H4 in this regard. (Old habits die hard!)
If I have confused matters or can clarify in any way, give me a shout.