Traditional vs self-publishing. It's a tricky subject. Let's take a moment to define the big four types of publishing.
Traditional big press: These are the 'Big Guys'. The ones most authors dream of getting into and making millions with. Often you need an agent for them to consider your work. They edit, they take care of the costs, covers, listing the book and getting it into stores. Most of them have arrangements with the stores to carry their books. That kind of thing happens when you've been around a long time. They can afford to warehouse, thus making mass market a viable option for them.
Big press tends to pay an advance. Advances are a whole other discussion because it must be earned back before you ever see a royalty. If you're lucky or famous enough, they'll do more than minimal promotion for you. They set the price, book size and type, distribution points, get the isbn (under their name). A successful author still needs to promote.
Traditional small press: Small press has gained a lot of popularity recently. Some pay advances, some not. Most ebook companies fit into this category. Small press often focuses on particular markets where they specialize. Like the big guys, they edit, pay for cover art, obtain the isbn(in their name) and format the books. They send them to a printer, which can be a print on demand arrangement or regular warehouse arrangement. Print on demand makes good business sense for small press since there isn't a big inventory to house and they can drop ship books to stores, authors or customers. Being small, they cannot afford to mass market produce books either.
Small press does have its distribution points, though more focused on the specialty (or genre). They do contract with bookstores to carry book and with the online retailers like Amazon, B&N, Chapters, and others. They often sell books from their website too.
Most small press do some promotion, though it will tend to be more about the press or the latest releases since their promotion dollars are smaller than the big press. Authors still are expected to be active in promoting their work.
Subsidy: I found it interesting that when googling 'subsidy publisher' the one on top of the list is Amazon's BookSurge (CreateSpace). The fact that Amazon will list your titles done through this program makes them subsidy, rather than self-published? Subsidy is when you pay for a book to be published--by pay I mean the publisher requires a minimum amount before they will publish you. This is often explained as set-up fees, formatting costs and sometimes additional money for 'enhanced' promotion. IUniverse and Lulu are two examples. Last I heard Amazon Create Space isn't charging set up fees, though they keep saying "yet".
You must do all of the editing. A subsidy publisher prints it exactly as you send the file in. You must do your formatting according to their guidelines and still purchase the cover art. They will provide the ISBN number for you.
The Subsidy publisher will list your book in their database which gets picked up by some of the online stores like Barnes & Noble. They will do little to no promotion. This part is all up to you.
Subsidy publishing is not for every author or every book. It's good for something that has a small niche and an author willing to push it within those confines. I've noticed many of those who offer seminars, workshops or webinars use this because they can sell copies through their appearances and websites. In nearly every case, the author offers ongoing information to potential readers from their lectures. This is indeed a type of promotion, albeit a teaching promotion where people feel like they get something useful before they buy the book. It's probably not a good venue for fiction though.
Self-publication: This is when you take your edited and formatted book to a printer and have X number of copies printed out. Keep them in your garage or closet. You have to hand sell these babies. Sure it can be done via a website, which you still have to promote along with the book. Plus you get to do all the shipping, taxes and marketing yourself. You have to buy the ISBN number, buy the cover art and do all the editing yourself.
Now if you love doing things yourself, are extremely self-motivated and like selling, this might be the route for you. Most of us don't have the time, energy or money to spend.
As you can see, there are a lot of differences. You have to choose which route you'd like to pursue. Many writers, like myself, tend to move amon g the options. It's possible with hard work to start out smaller and build readers (meaning a fan base) which you can use to pitch your next book to the larger folks or an agent. Like the quote from says, "Choose wisely."