The difference between drywood and dampwood termites lies in their preferred habitat and wood type. Drywood termites infest dry, sound wood and do not require contact with soil or moisture. They are commonly found in attics, furniture, and structural wood. Dampwood termites, on the other hand, thrive in moist or decaying wood and are often associated with water-damaged areas, such as leaking pipes, rotting logs, or wet basements. Dampwood termites are typically larger than drywood termites.