An ObservableCollection can be updated from UI exactly like any collection. The true difference is rather straightforward:
ObservableCollection<T> implements INotifyCollectionChanged which provides notification when the collection is changed (you guessed ^^)
It allows the binding engine to update the UI when the ObservableCollection is updated.
However, BindingList<T> implements IBindingList.
IBindingList provides notification on collection changes, but not only that. It provides a whole bunch of functionality which can be used by the UI to provide a lot more things than only UI updates according to changes, like:
- Sorting
- Searching
- Add through factory (AddNew member function).
- Readonly list (CanEdit property)
All these functionalities are not available in ObservableCollection<T>
Another difference is that BindingList relays item change notifications when its items implement INotifyPropertyChanged. If an item raises a PropertyChanged event, the BindingList will receive it an raises a ListChangedEvent with ListChangedType.ItemChanged and OldIndex=NewIndex (if an item was replaced, OldIndex=-1). ObservableCollection doesn’t relay item notifications.
Note that in Silverlight, BindingList is not available as an option: You can however use ObservableCollections and ICollectionView (and IPagedCollectionView if I remember well).