While Wikipedia may not be authoritative, I think they got it right on this one.
Earbuds are very small headphones that are fitted directly in the outer ear, facing but not inserted in the ear canal.
http://en.wikipedia.org/wiki/Earbud#Earbuds
In-ear headphones, also known as in-ear monitors (IEMs) or canalphones, are small headphones with similar portability to earbuds which are inserted in the ear canal itself.
http://en.wikipedia.org/wiki/Earbud#In-ear_headphones