A felony is a serious crime, such as arson or murder. In addition, if the law provides for imprisonment for an offense that is longer than one year, the offense is usually considered a felony. A felony arrest remains on your record forever and can be used against you for sentencing purposes on future cases, regardless if you were guilty or innocent of that previous charge. In Michigan a single conviction, even if a felony, can be expunged after five years. Some convictions are ineligible for expungement.
A misdemeanor is a petty offense. It is a less serious crime than a felony, punishable by less than a year of confinement. Most misdemeanors are punishable by up to 93 days in jail but a high misdemeanor is punishable but up to two years in prison. The confinement for anything other than a high misdemeanor is in a city or county jail, rather than a penitentiary or prison.
Generally, the potential punishment is the deciding factor in whether a crime falls into one category or the other. If imprisonment for longer than a year is the punishment provided by law, it is usually considered a felony. If the potential punishment is for a year or less, then the crime is considered a misdemeanor.