Hydration applies to the inner layers – the medulla and cortex – and is all about absorbing and retaining water. Meanwhile, moisture pertains to the outer layer – the cuticle – and is all about regulating that water by sealing it in with oils so it doesn't evaporate from your hair too quickly.
Hydrating ingredients bring or add water to your hair while moisturising products lock or seal in the water preventing moisture loss.
Hydration is the process of applying water to the hair and involves penetrating the hair strand. It is meant to increase the absorption of water in your hair follicles, and increasing the amount of water in your hair. The heightened level of hydration makes your hair soft, bouncy, and strong, as opposed to dry, frizzy, scratchy, and brittle. Moisturisation is the process of locking water or hydration in the hair shaft, which is focused on the surface of the hair strand. This can be done with any product, process, or tool that will slow down water evaporating or leaving your hair.
So while hydration is about moisture absorption, moisturisation is about moisture retention. This means hydrators will normally contain humectants while moisturisers contain sealants or anti-humectants. You need to both hydrate and moisturise in order to keep your hair from getting dry.
To help keep your hair hydrated look for products which have water as it’s first ingredients, or hydrosols: aloe vera juice and glycerin in its top five ingredients. Next should be oil for sealing, penetrating oils. These products will help you with moisture retention. Water is a hydrator and other liquids, oils, seal that hydration in to keep your hair moisturised.