Cellular differentiation is a concept from developmental biology describing the process by which cells acquire a "type". The morphology of a cell may change considerably during differentiation, but the genetic material remains the same, with few exceptions.
A cell that is able to differentiate into many cell types is known as pluripotent. These cells are called stem cells in animals and meristematic cells in higher plants. A cell that is able to distinguish into all cell types is known as totipotent. In mammals, only the zygote and early embryonic cells are totipotent, while in plants, many differentiated cells can become totipotent with simple laboratory techniques.
In most multicellular organisms, not all cells are alike. For example, cells that make up the human skin are different from cells that make up the inner organs. Yet, all of the different cell types in the human body are all derived from a single fertilized egg cell through differentiation.