Urban rail transit is an all-encompassing term for various types of railroads, typically in urban or older suburban areas. The vast majority of urban rail vehicles these days run on electricity. The set of urban rail systems can be roughly subdivided into two categories, which sometimes overlap, causing some systems or lines to have aspects of each.

• Light rail is typically used to mean a system partially on the surface, with at-grade crossings of roads and walkways. Trains are usually at most several cars long, and are built to lower standards. Platforms are usually at the level of the track; stations can be as frequent as every few blocks, and are often just stops on the road with no special infrastructure. Electricity is typically supplied by overhead lines. Other names for these systems include streetcars, trams and trolleys; interurbans are also included in this category.
• Urban heavy rail typically runs grade-separated from all intersecting roads, in tunnels or on elevated structures, or in open cuts in outlying areas. Trains typically run faster than light rail and stops are less frequent. Platforms are usually raised, and trains can reach ten or more cars in length, providing more capacity than light rail at higher headways. Electricity may be provided by a third rail. Systems of this type can be called subways, metros, undergrounds or elevated railways. Regional rail systems are often called heavy rail, but have several differing characteristics (see below).

Terms typically used for one type of system can be used for the other. For example, Boston's Green Line is referred to as a subway, despite having street-running portions. The Docklands Light Railway in London is an elevated system that shares more characteristics with heavy rail than light rail; it is named to distinguish it from the London Underground, which is built to yet higher standards.

Other types of passenger rail include the following:

• Funiculars are inclined railways that carry passengers up and down steep slopes.
• Regional rail or commuter rail runs on trackage often shared with freight trains , typically serving newer suburbs and rural areas. Commuter rail trains are typically built to higher standards, as they run at higher speeds are at risk of more severe crashes. This distinguishes commuter rail from interurbans, which use light rail vehicles on tracks through lower density areas.

A bus shares many characteristics with light rail, but does not run on rails. Trolleybuses are buses that run off overhead wires. Railbuses, vehicles that can travel both on rails and on roads, have been experimented with, but are not in common use.

Terminology

Those who use the American term subway or the British underground often specify that at least the most important, central parts of the system must be located below street level, so that pedestrians and road users see the street exactly as it would be without the subway. On the other hand, those who use metro tend to view this as a less important characteristic and include systems that are entirely elevated or at ground level (at grade) as long as the other criteria are met. In some cities where subway is used, it refers to the entire system; in others, only to the portions that actually are underground. Naming practices often select one type of placement in a system where several are used; there are many subways with above-ground components, and on the other hand, the Vancouver SkyTrain and Chicago El include underground sections.

Germanic languages generally use names meaning underground railway, while many others use metro. In London, the word metro most commonly refers not to the London Underground and Docklands Light Railway, but to frequent suburban National Rail train services.

Subway is most commonly used in the United States and some parts of Canada, though the term is also used elsewhere, such as to describe the subway line in Glasgow, Scotland and in translation of system names or descriptions in some Asian cities into English.

Some lines described as subway use light rail equipment. Notably, the Newark City Subway and Boston's Green Line, each about half underground, originated from fully surface streetcar lines. Some times the term is qualified, such as in Philadelphia, where trolleys operate in an actual subway for part of their route and on city streets for the remainder. This is locally styled subway-surface. The Brussels Metro has three traditional heavy rail lines and two "premetro" lines which run trolleys but have enough width to be eventually converted to the bigger metro standards if the traffic warrants it.

Bus subways are uncommon but do exist, though in these cases the non-underground portions of route are not called subways. Seattle, Washington has a bus subway downtown, in which dual-fuel buses can operate on overhead wires when in the subway and via internal combustion when outdoors. Bus subways are sometimes built to provide an exclusive right-of-way for bus rapid transit lines, such as the MBTA Silver Line in Boston.

Light rail is the successor term to streetcars, trolleys and trams in many locales, although the term is most consistently applied to modern or modernised tram or trolley operations employing features more usually associated with metro or subway operations, including exclusive rights-of-way, multiple unit train configuration and signal control of operations.

The term light rail is derived from the British English term light railway long used to distinguish tram operations from steam railway lines, as well as from its usually lighter infrastructure. The term was adopted in the 1970s, particularly in the United States, as a conscious break from the obsolescent image of streetcars. It is sometimes used largely for political reasons; in Toronto, the city Transit Commission had to rename a recent project to build a dedicated right of way for one of its streetcar lines as a 'new, modern LRT' in order to obtain the support of politicians, and then change it back to a 'normal, familiar streetcar' to be accepted by the area's residents (the actual project was the same the whole time).

In the U.S. a tram is a tourist bus in the appearance of a heritage streetcar, a suspended cable car (aerial tramway), or a rubber-tired people-mover used for parking lot shuttles at theme parks and major events.

The term streetcar is generic to most forms of common carrier rail transit that runs or has run on streets, providing a local service and picking up and discharging passengers at any street corner, unless otherwise marked.

The term streetcar was and is used interchangeably with horsecar or trolley. Cable cars are less often referred to as "streetcars."

What would be called a streetcar is known as a tram in most of the world, though some tram installations or routes would not be called streetcars.

Modern streetcar lines in the U.S. may be called streetcars or trolleys or by the term light rail, especially if the line has some grade separation, dedicated right-of-way, or other rapid transit features.

In the Tennessee Williams play, A Streetcar Named Desire, the term streetcar is used allegorically to refer to Blanche duBois ' promiscuousness and inability to form permanent relationships, as in the sarcastic phrase: "Men (or women) are like streetcars. There'll be another one along any minute."

There was actually a streetcar line in New Orleans named Desire Street and simply signed Desire. It is mentioned in the book and an actual New Orleans streetcar with that signage is seen at the beginning of the Marlon Brando-Vivien Leigh film.

The name tram is from Low German traam, meaning the "beam (of a wheelbarrow)", although some sources claim that it is derived from the name of engineer Benjamin Outram.

An Elevated railway is a railway built on supports over other rights of way, generally city streets. They are also called elevateds or els. In the United States, only the Chicago 'L' is known by that name ('L' is short for elevated).

Attempting to define "light rail"

Most rail technologies, including high-speed, freight, commuter/regional, and metro/subway are considered to be "heavy rail" in comparison. A few systems such as people movers and personal rapid transit could be considered as even "lighter", at least in terms of how many passengers are moved per vehicle and the speed at which they travel. Monorails are also considered to be a separate technology. Light rail systems can handle steeper inclines than heavy rail, and curves sharp enough to fit within street intersections (though this is hardly true for all light-rail lines). They are typically built in urban areas, providing frequent service with small, light trains or single cars.

The most difficult distinction to draw is that between light rail and streetcar or tram systems. There is a significant amount of overlap between the technologies, and it is common to classify streetcars/trams as a subtype of light rail rather than as a distinct type of transportation. The two general versions are:

1. The traditional type, where the tracks and trains run along the streets and share space with road traffic. Stops tend to be very frequent, but little effort is made to set up special stations. Because space is shared, the tracks are usually visually unobtrusive.
2. A more modern variation, where the trains tend to run along their own right-of-way and are often separated from road traffic. Stops are generally less frequent, and the vehicles are often boarded from a platform. Tracks are highly visible, and in some cases significant effort is expended to keep traffic away through the use of special signaling and even grade crossings with gate arms. At the highest degree of separation, it can be difficult to draw the line between light rail and metros, as in the case of London's Docklands Light Railway, which would likely not be considered 'light' were it not for the contrast between it and the London Underground.

Many light rail systems — even fairly old ones — have a combination of the two, with both on road and off road sections. In some countries, only the latter is described as light rail. In those places, trams running on mixed right of way are not regarded as light rail, but considered distinctly as streetcars or trams. However, the requirement for saying that a rail line is "separated" can be quite minimal — sometimes just with concrete "buttons" to discourage automobile drivers from getting onto the tracks.

There is a significant difference in cost between these different classes of light rail transit. The traditional style is often less expensive by a factor of two or more. Despite the increased cost, the more modern variation (which can be considered as "heavier" than old streetcar systems, even though it's called "light rail") is the dominant form of urban rail development in the United States. The Federal Transit Administration helps to fund many projects, but as of 2004, the rules to determine which projects will be funded are biased against the simpler streetcar systems (partly because the vehicles tend to be somewhat slower). Some places in the country have set about building the less expensive streetcar lines themselves or with only minimal federal support. Most of these lines have been "heritage" railways, using refurbished or replica streetcars harkening back to the first half of the 20th century. However, a few, such as the Portland Streetcar, use modern vehicles. There is a growing desire to push the Federal Transit Administartion to help fund these startup lines as well.

Light rail is generally powered by electricity, usually by means of overhead wires, but sometimes by a live rail, also called third rail (a high voltage bar alongside the track), requiring safety measures and warnings to the public not to touch it. In some cases, particularly when initial funds are limited, diesel-powered versions have been used, but it is not a preferred option. Some systems, such as the JFK Airtrain in New York City, are automatic, dispensing with the need for a driver; however, such systems are not what is generally thought of as light rail. Automatic operation is more common in smaller people mover systems than in light rail systems, where the possibility of grade crossings and street running make driverless operation of the latter inappropriate.