The key difference between pdoc and pdoc3 is in their development and functionality. pdoc was the original tool for generating Python documentation, but its development has stopped, making it outdated for modern projects. In contrast, pdoc3 is an actively maintained fork of pdoc that brings several improvements, like better support for Python 3 features (including type hints and async functions), improved Markdown rendering, customizable templates, and a live-preview server for documentation. While pdoc is no longer widely used, pdoc3 has become a more reliable and feature-packed option for creating Python project documentation.