What is the difference between the words transparent and translucent?

Lenses and glass bottles are transparent. As you quoted above, the different has to do with diffusion.

Here is an example of an image through a transparent object:

Here is an example of a translucent object:

This is an example of how diffusion causes translucency:

As light passes through a translucent object, it either enters or exists a rough surface that causes light to reflect and refract at a bunch of different angles. This causes the image through the glass to be very blurry.

When you look through a glass or lens and object isn't clear, that's because it isn't focused, not because of diffusion. There are many reasons why images won't be focused but most have to do with the lens not being shaped perfectly or different behavior for different colors of light. See Wikipedia on optical aberrations for more information on this.

Here is an example of a perfect lens (top) versus a lens with a spherical aberration (bottom):

The word transparent is used in all cases where diffusion isn't involved. Even if the lens is poor and causes images to not focus properly, as long as the issue is due to aberrations. The word translucent gets applied when there is significant diffusion of light to the point where the object looks "cloudy" or "frosted" and a sharp image can never be formed.

When you look through glasses with water and see an out-of-focus image, the glasses are still transparent.