The difference between the two is what you are actually deleting. If you aredeleting a list, the contacts remain intact, in your Subscribers area. They were always, and will remain, members of the master All list. You are simply deleting the segmentation of that list you’ve created. The list is gone, for good, but the contacts remain in your subscribers. The total count of contacts in your subscribers remains the same.
When you delete contacts however, the contacts, themselves, are permanently deleted from your subscribers. This reduces the total number of contacts in your Subscribers area, and in your master All list. Those contacts are removed completely, and there’s no way to recover them, once you’ve deleted.
We always recommend exporting your contacts to a CSV or XLS file, before you delete anything. That way you will have a back-up, just in case!
If you’re trying to reduce your subscribers total, you need to delete contacts. However, if you’re trying to rearrange your lists, or re-segment your subscribers — then deleting lists might be more what you’re looking for. Just remember that when you delete a list your All master total will not change, because you’re not deleting any contacts from your subscribers.