Difference between /res and /assets directories

Both are pretty similar. The real main difference between the two is that in the res directory each file is given a pre-compiled ID which can be accessed easily through R.id.[res id]. This is useful to quickly and easily access images, sounds, icons...

The assets directory is more like a filesystem and provides more freedom to put any file you would like in there. You then can access each of the files in that system as you would when accessing any file in any file system through Java. This directory is good for things such as game details, dictionaries,...etc. Hope that helps.

With resources, there's built-in support for providing alternatives for different languages, OS versions, screen orientations, etc., as described here. None of that is available with assets. Also, many parts of the API support the use of resource identifiers. Finally, the names of the resources are turned into constant field names that are checked at compile time, so there's less of an opportunity for mismatches between the code and the resources themselves. None of that applies to assets.

So why have an assets folder at all? If you want to compute the asset you want to use at run time, it's pretty easy. With resources, you would have to declare a list of all the resource IDs that might be used and compute an index into the the list. (This is kind of awkward and introduces opportunities for error if the set of resources changes in the development cycle.) (EDIT: you can retrieve a resource ID by name using getIdentifier, but this loses the benefits of compile-time checking.) Assets can also be organized into a folder hierarchy, which is not supported by resources. It's a different way of managing data. Although resources cover most of the cases, assets have their occasional use.

One other difference: resources defined in a library project are automatically imported to application projects that depend on the library. For assets, that doesn't happen; asset files must be present in the assets directory of the application project(s). [EDIT: With Android's new Gradle-based build system (used with Android Studio), this is no longer true. Asset directories for library projects are packaged into the .aar files, so assets defined in library projects are merged into application projects (so they do not have to be present in the application's /assets directory if they are in a referenced library).]

EDIT: Yet another difference arises if you want to package a custom font with your app. There are API calls to create a Typeface from a font file stored in the file system or in your app's assets/ directory. But there is no API to create a Typeface from a font file stored in the res/ directory (or from an InputStream, which would allow use of the res/ directory). [NOTE: With Android O (now available in alpha preview) you will be able to include custom fonts as resources. See the description here of this long-overdue feature. However, as long as your minimum API level is 25 or less, you'll have to stick with packaging custom fonts as assets rather than as resources.]

I know this is old, but just to make it clear, there is an explanation of each in the official android documentation:

from http://developer.android.com/tools/projects/index.html

assets/

This is empty. You can use it to store raw asset files. Files that you save here are compiled into an .apk file as-is, and the original filename is preserved. You can navigate this directory in the same way as a typical file system using URIs and read files as a stream of bytes using the AssetManager. For example, this is a good location for textures and game data.

res/raw/

For arbitrary raw asset files. Saving asset files here instead of in the assets/ directory only differs in the way that you access them. These files are processed by aapt and must be referenced from the application using a resource identifier in the R class. For example, this is a good place for media, such as MP3 or Ogg files.