Difference between "gcloud auth application-default login" and "gcloud auth login"

The difference is the use cases:

As a developer, I want to interact with GCP via gcloud.
gcloud auth login
This obtains your credentials and stores them in ~/.config/gcloud/. Now you can run gcloud commands from your terminal and it will find your credentials automatically. Any code/SDK will not automatically pick up your creds in this case.

Reference: https://cloud.google.com/sdk/gcloud/reference/auth/login

As a developer, I want my code to interact with GCP via SDK.
gcloud auth application-default login
This obtains your credentials via a web flow and stores them in 'the well-known location for Application Default Credentials'. Now any code/SDK you run will be able to find the credentials automatically. This is a good stand-in when you want to locally test code which would normally run on a server and use a server-side credentials file.

Reference: https://cloud.google.com/sdk/gcloud/reference/auth/application-default/login

Edit (09/19/2019):
As Kent contributed in his comment below, 'the well-known location for Application Default Credentials' is a file named application_default_credentials.json located in your local ~/.config/gcloud/ directory. I've added an additional link below to an article by Theodore Sui and Daniel De Leo which goes into greater detail about the difference authentication methods.

Article: https://medium.com/google-cloud/local-remote-authentication-with-google-cloud-platform-afe3aa017b95

I'm adding this as an answer because I don't have the reputation to comment. I think @Himal's answer is spot on but I'd like to clarify that when it says code/SDK, we should think code or Language (Java/Ruby/Python) SDK v/s the gcloud SDK (which is also referred to as Cloud SDK). This confused me a bit because I had the same doubts

So, gcloud auth login -> Login to gcloud SDK

gcloud auth application-default login -> Login to any code running on the computer (language SDK's within an application)

There is also a give-away in the OAuth authentication screen in the browser windows that open up:

gcloud auth login asks you to choose an account to continue to give access to 'google cloud sdk'.

gcloud auth application-default login asks you to give access to google auth library instead.