LaTeX, which is pronounced «Lah-tech» or «Lay-tech», is a document preparation system for high-quality typesetting. It is most often used for medium-to-large technical or scientific documents but it can be used for almost any form of publishing. LaTeX is not a word processor! Instead, LaTeX is based on the idea that it is better to leave document design to document designers, and to let authors get on with writing documents.
BibTeX is reference management software for formatting lists of references and makes it easy to cite sources in a consistent manner, by separating bibliographic information from the presentation of this information, similarly to the separation of content and presentation/style supported by LaTeX itself.