This helps to determine where the child will go to in the event of a social, criminal or divorce case, and who will be in charge of the welfare of the child. In divorce, the child usually stays with 1 parent, but usually the other parent can have joint custody to, so that the child will be able to still stay in touch and bond with both of his parents.
As Sullivan41 mentioned above, child custody determines which parent will be the legal guardian and ensure the welfare of their child. Custody is usually given to the parent who seems more emotionally, psysiological, physically and financially able to care for the child without any struggle. Usually custody is granted by the judge who will evaluate on which parent is more suitable. This ensures the child's rights, and prevents an suitable parent from taking over.
Custody just means who will take care of the children, especially in the event of a divorce or the death of a parent. Natural parents are usually granted custody of their children unless there are extenuating circumstances. When parents divorce, custody becomes a question because of course the children can’t live with both parents full time. A lot of families do work out shared custody situations though, where kids live with each parent about the same amount of time. In other cases, one parent will have primary physical custody while the other has the right to appropriate visitation with the kids.