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Jam is a thick mixture of fruit, sugar (and sometimes pectin) that is cooked until the pieces of fruit are very soft and almost formless. It is used as a bread spread, a filling for pastries and cookies and an ingredient for various desserts.
Jelly is a clear, bright mixture made from fruit juice, sugar and sometimes pectin. The texture is tender but will be firm enough to hold its shape when turned out of its container. Jelly is used as a bread spread and as a filling for some cakes and cookies. In Britain, jelly is the term used for gelatin dessert.
And you forgot one other...
Preserves are fruit cooked with sugar and usually pectin, used as a spread for bread. Preserves differ from jam in that the chunks of fruit are medium to large rather than the texture of thick puree.
So, when you were thinking of "has the bits", you were thinking of preserves. Neither jam nor jelly has actual bits.
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