The main difference between the GPL and the LGPL is that the latter can be linked to (in the case of a library, ‘used by’) a non-(L)GPLed program, which may be free software or proprietary software.[1] This non-(L)GPLed program can then be distributed under any chosen terms if it is not a derivative work. If it is a derivative work, then the terms must allow “modification for the customer’s own use and reverse engineering for debugging such modifications.” Whether a work that uses an LGPL program is a derivative work or not is a legal issue. A standalone executable that dynamically links to a library is generally accepted as not being a derivative work. It would be considered a “work that uses the library” and paragraph 5 of the LGPL applies.

A program that contains no derivative of any portion of the Library, but is designed to work with the Library by being compiled or linked with it, is called a “work that uses the Library”. Such a work, in isolation, is not a derivative work of the Library, and therefore falls outside the scope of this License.
Essentially, it must be possible for the software to be linked with a newer version of the LGPL-covered program. The most commonly used method for doing so is to use “a suitable shared library mechanism for linking”. Alternatively, a statically linked library is allowed if either source code or linkable object files are provided.

One feature of the LGPL is that one can convert any LGPLed piece of software into a GPLed piece of software (section 3 of the license). This feature is useful for direct reuse of LGPLed code in GPLed libraries and applications, or if one wants to create a version of the code that software companies cannot use in proprietary software products.

Why you shouldn’t use the Library GPL for your next library
The GNU Project has two principal licenses to use for libraries. One is the GNU Lesser GPL; the other is the ordinary GNU GPL. The choice of license makes a big difference: using the Lesser GPL permits use of the library in proprietary programs; using the ordinary GPL for a library makes it available only for free programs.
Which license is best for a given library is a matter of strategy, and it depends on the details of the situation. At present, most GNU libraries are covered by the Lesser GPL, and that means we are using only one of these two strategies, neglecting the other. So we are now seeking more libraries to release under the ordinary GPL.
Proprietary software developers have the advantage of money; free software developers need to make advantages for each other. Using the ordinary GPL for a library gives free software developers an advantage over proprietary developers: a library that they can use, while proprietary developers cannot use it.
Using the ordinary GPL is not advantageous for every library. There are reasons that can make it better to use the Lesser GPL in certain cases. The most common case is when a free library’s features are readily available for proprietary software through other alternative libraries. In that case, the library cannot give free software any particular advantage, so it is better to use the Lesser GPL for that library.
This is why we used the Lesser GPL for the GNU C library. After all, there are plenty of other C libraries; using the GPL for ours would have driven proprietary software developers to use another—no problem for them, only for us.
However, when a library provides a significant unique capability, like GNU Readline, that’s a horse of a different color. The Readline library implements input editing and history for interactive programs, and that’s a facility not generally available elsewhere. Releasing it under the GPL and limiting its use to free programs gives our community a real boost. At least one application program is free software today specifically because that was necessary for using Readline.
If we amass a collection of powerful GPL-covered libraries that have no parallel available to proprietary software, they will provide a range of useful modules to serve as building blocks in new free programs. This will be a significant advantage for further free software development, and some projects will decide to make software free in order to use these libraries. University projects can easily be influenced; nowadays, as companies begin to consider making software free, even some commercial projects can be influenced in this way.
Proprietary software developers, seeking to deny the free competition an important advantage, will try to convince authors not to contribute libraries to the GPL-covered collection. For example, they may appeal to the ego, promising “more users for this library” if we let them use the code in proprietary software products. Popularity is tempting, and it is easy for a library developer to rationalize the idea that boosting the popularity of that one library is what the community needs above all.
But we should not listen to these temptations, because we can achieve much more if we stand together. We free software developers should support one another. By releasing libraries that are limited to free software only, we can help each other’s free software packages outdo the proprietary alternatives. The whole free software movement will have more popularity, because free software as a whole will stack up better against the competition.

1. “Your actions speak so loudly that I can’t hear what you’re saying”

2. Also, Barry adds his own nugget of wisdom, “Capital goes to where its treated best”

3. Dreams are not what you see while you are sleeping…are for what you lost your sleeps.