Android : What is the difference between a project dependency and other dependencies

I'm working on another issue with getting my build.gradle to understand a workspace project dependency in my Android project. I've been using Java and Android for a while and I'm still easily confused about all the different ways to add a dependency. One way is to put a .jar file in the libs/ folder. Another way is to have a workspace project dependency. Another way (if working with Android) is to add a project dependency in the Android options menu? I feel like if I truly understood why there are these different dependencies and how they work maybe I wouldn't constantly have issues with managing my dependencies (even with Gradle). Why would one want a project dependency instead of a normal .jar in the libs/ folder? I'm not even sure how a project dependency itself works. By project dependency, I mean something like the Google Play Services project that I have to import into my Eclipse workspace. When importing into Eclipse it doesn't copy the actual directory into the workspace but it's more like a link to the directory. I know this is a big topic, maybe someone can show me a concise place to gain information.