I will preface this by saying I am a long-time lurker in the IOT subforum.
The main difference between IOT and NESing is of community. Any other differences stem from this central one. AS to what IOT and NESes actually are: there are no significant differences.
[INSERT]What Gamez says is true, but even this difference is rapidly closing.[/INSERT]
IOTs attempt to follow the logic of the world as much as their GM demands. In IOTs such as Iron and Blood, the GMs attempt highly logical and realistic simulations of geopolitics and history. Other IOTs are sillier. Again, not only do we have Perf and EQ NESes, but also Imago NESes and Savag NESes. The main difference I see here is that IOT GMs are overall and generally more tolerant of unrealistic/unreasonable/non sequitor moves. This leads to a community that, unlike ours, doesn't place as high as a value on this aspect of the game.
IOTs also generally more mechanically based; again, that is due to their community. Remember the "Black Box" movement several years back spearheaded by Bird Jaguar and Matt0088? Imagine a semi-transparent black box with most variables calculable if desired, but automated if not. Many of the more complex IOTs utilize this type of system, where spending directly affects success rates of spies, or in the calculation of trade values. Why did they move in this direction? From reading articles written by various IOT significants, it is because of the backlash to warmongers early in IOT history where there is a general demand for a progression of rules to limit the ability for any nation to develop and utilize WMDs or massive armies. Currently there are both reactionary "return to our roots" style IOTs, "classic" IOTs and newer IOTs with indepth economic models taking cues from former rulesets as well as SysNES.
Both IOTs and NESes are in their basis a Roleplaying/Politic'ing mixture with freedom to branch out as their GM and community wishes.
I would play more IOTs if the general community doesn't turn me off as much as it does. This is similar to how alt-his and modern-esque NESes turn me off.
There are "NES-styled" IOTs and "IOT-styled" NESes.
tl;dr
Main difference is community and how they developed- yes, this does lead to a difference in focus and execution. In the manner of the differences between IOTs and NESes themselves, there are no real differences in what they are, what they are intended to be, what counts within their definition... etc.