The avatar is the unseen entity controlled by the player or user. It is two blocks high and can jump one block high. It can interact in the world by destroying blocks with the pickaxe, building things, painting things, and setting things on fire. There is no image of it. The avatar can be hurt, but is invincible. This may change in version 2.0.
The player uses the user interface to control the avatar. It is the only character the player can use. It can interact with creatures and some blocks. When the avatar interacts with the generated world, certain things occur (Ex: breaking blocks or entering a certain area will cause ambient sound and ambient noise to occur.) As can be seen by the picture above, a popular way to make "people" throughout their world is placing 2 solid colored blocks down.