Potato Starch is a very fine flour with a bland taste, that is made by removing the potato peel, made into a slurry and watery mix, then dehydrated to form Potato Starch. The Potato Starch is not cooked, thus it does not absorb much water unless it is heated. For example, it will make an excellent gravy if heated with liquid in a saucepan.
Potato Flour is heavy with a definite potato flavor made from the actual potato including the potato skin and will absorb large amounts of water because it has been cooked and contains the peel. It is not used as main flour in baking as it would absorb too much liquid and make the product gummy. Small amounts are used to increase water, hold product together and so on.