Profile
When you turn on your XBOX to play a video game or download streaming content from the internet, you must first log into your XBOX profile. The XBOX profile allows you to save your game achievements locally to your console. It also enables you to create an XBOX avatar to distinguish visually between other gamer profiles on the console.
Gamertag
Your XBOX gamertag is different, though related, to your profile. The gamertag is the name you use to log into your XBOX Live account. XBOX Live is a paid subscription to the Microsoft XBOX servers, enabling you to play games against users around the world and download streaming content via the XBOX Marketplace.
Linking the Two
After creating a profile on your XBOX, you can connect it to your gamertag. In the "Settings" area of the XBOX home screen, go to the "XBOX Live" tab. It will show your current profile with the option "Recover Gamertag from XBOX Live" below it. Highlight that option and press "A." Select "Gamertag," enter the gamertag you wish to connect to your XBOX profile and select "Done" and "Next." Enter your Windows Live information when prompted to connect your gamertag to your profile.
Subscription Changes
You must maintain an active XBOX Live Gold subscription in order to access any online content through your gamertag. Should you fail to renew your Gold membership, it will revert to a Silver membership. This will keep your gamertag and profile synced with your achievement information, but will not permit you to play other gamers online.