The difference is the finality (Does this word exist ?)
At the end tinylauncher is made to be simple fast and efficient to launch your games. (if Gibs can confirm that ?)
Xbench is made to replace the wbench and will have a lot of features like cli and files manager. The chalenge is also to made an oldschool interface (like cracktro) that is fast and smart and can display many colors on a simple A500 (Actually 64 but a previous internal alpha was displaying 160 colors on OCS).
The next release (0.2) will be able to switch between 5 listings of game/demos/apps and will have a new advanced setup/prefs manager.
The actual xbench release available to download is just the first brick of the wall.