Formosan and drywood termites differ in habitat, colony size, and damage potential. Formosan termites are a subterranean species requiring soil contact, while drywood termites infest dry wood without needing soil. Formosan termite colonies are large, often exceeding a million individuals, whereas drywood termite colonies are smaller, typically a few thousand. Due to their large colonies, Formosan termites can cause more rapid and extensive damage compared to drywood termites.