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The terms railroad and railway generally describe the same thing, a guided means of land transport, designed to be used by trains, for transporting both passengers and freight. Etymologically both words derive from Old English; a road being something one rides along and way deriving from a Germanic base meaning move, journey, carry.
U.S. practice
Historically, in the United States of America the term railroad, especially when used in a company name, implies a conventional rail system and railway implies a street railway, also known as a streetcar or light rail line. There are, however, quite a number of exceptions. In fact, many companies change from one term to the other when they re-incorporate, possibly to distinguish between the old and new companies (example: Seaboard Air Line Railroad).
Railroad The term railroad is almost exclusively used in the U.S. to describe conventional rail transport systems that are part of the national rail network, what until the mid-20th century were often described as steam railroads. These systems now operate primarily diesel or electric powered locomotives drawing non-powered passenger or freight cars, though some passenger runs, especially commuter runs, are operated with trains of self-propelled cars, using multiple-unit train control.
The alternative form of rail road as two words primarily reflects early practice, but several roads retain this form, notably the Long Island Rail Road, the oldest railroad in the U.S. still operating under its original name.
Though the use of railroad is prime in U.S. practice as desribed above, there are notable exceptions. Earlier railroads that were British influenced in management, engineering and/or construction also had a greater tendency to use the term railway as in Southern Railway and Chicago and North Western Railway, the latter also using the British practice of left-hand running. Railroad companies in bankruptcy sometimes retained their name in reorganization but changed railroad to railway or vice versa; e.g., Staten Island Rapid Transit Railroad Company changed to Staten Island Rapid Transit Railway Company. And some U.S. railroads are "railways' for no obvious reason, such as Vermont Railway and Kansas City Southern Railway.
Railway Urban and interurban electric railways using single cars or short trains have more commonly used the term railway in their names than regular railroads in the U.S. Examples include the Pacific Electric Railway, San Francisco Municipal Railway, Municipal Railway Company (New York), Boston Street Railway Company and Chicago Railways. Here, too, there are exceptions. The first street railway company in Brooklyn, New York City to operate an electric trolley line was the Coney Island & Brooklyn Railroad.
Other English speaking countries In the United Kingdom the term rail road was often used in the early days of the railways, but by about the 1850s railway had become the preferred term, with the term rail road becoming disused. British use of the term railway extended to the rail transport systems that the British built in the British Empire, and elsewhere in the world.
Outside of the U.S., the term railway is used almost exclusively; however, even there a distinction is sometimes made between conventional railways and street railways or trams, styling the latter light railways from which the modern term light rail is descended.
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