What is the difference between JWT & JWT Token Exchange in Salesforce Named Credentials?

What is the difference between JWT & JWT Token Exchange in Salesforce Named Credentials?

JWT Token: 
Salesforce will issue the token for the external system. When your code uses the named credential to call your third party service, Salesforce will send the newly issued JWT token to your third party service as a bearer token.

JWT Token Exchange:
Salesforce will issue a JWT token and send it to the external authorization service( Token Endpoint URL). The authorization service will exchange the provided JWT token for the access token. When your code uses the named credential to call your third party service, Salesforce will send the access token received from authorization service to your third party service as a bearer token to authenticate into the external system.

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