A leaked document from Nokia showcases the differences between the Windows Phone 7.8 platform and the Windows Phone 8 platform. As you can see in the pic above the following are the primary things that WP 8 can do that WP 7.8 is missing:
  • Over-the-air updates
  • Support for screen resolutions higher than WVGA
  • Internet Explorer 10
  • Multi-core processor support
  • Windows Phone Wallet
  • NFC
  • Real multitasking
  • MicroSD card support
  • Device Management
  • Company Hub
  • Secure Boot and Encryption
It's nice to finally get a clearer picture on what sort of differences we will see between the two. Windows Phone 7.8 will do its best to create a bridge between WP 7 devices and WP 8 devices, but there are still some notable features missing.

Source: UnWiredView