What is the difference between a private assembly and a shared assembly?

The assembly which is used only by a single application is called as private assembly. Suppose you created a DLL which encapsulates your business logic. This DLL will be used by your client application only and not by any other application. In order to run the application properly your DLL must reside in the same folder in which the client application is installed. Thus the assembly is private to your application.

Suppose that you are creating a general purpose DLL that provides functionality, which will be used by variety of applications. Now, instead of each client application having its own copy of DLL you can place the DLL in 'global assembly cache'. Such assemblies are called as shared assemblies.