A phone is a minimal unit of sound, which can be phonetically atomised into features. For e.g. the phone [b] can be decomposed to its characteristic features: voiced, bilabial, plosive.
A phoneme on the other hand is a ‘psychological reality’. They represent the perceived organisation of the actual phones by a listener.
Phones are absolute and untied to a language. Phonemes however are distinct only with reference to a language. For e.g. consider the phones [p] and [ph]:
In English, the aspiration does not distinguish these two as phonemes in the language, since pen [phen] (with aspiration) and pen [pen] (without aspiration) are examples of two equivalent pronunciations for the word.
However, in Hindi, the presence of this aspiration can change the meaning of the word, for example ‘पल’ [pəl] and ‘फल’ [phəl].
This means that in Hindi, [p] and [ph] are two distinct phonemes.
Multiple phones which can be used to pronounce the same phoneme in the language are called allophones.
Two phones are said to be in contrastive distribution if changing one to the other results in a change in the meaning, i.e if the two phones are distinct phonemes in the language.
Two phones are said to be in complementary distribution if they are not distinct phonemes in the language, but the phones are not used interchangably; the phonetic context decides which phone is used.
In English, for e.g. [p] and [ph] are in complementary distribution, we use the aspirated [ph] sound when the /p/ phoneme is present at the beginning of an stressed syllable, such as in ‘part’ [phaɹt]. In other situations, we use the [p] sound, such as in ‘sipping’ [sippiŋ]