To be labeled as Tequila it must be made in one of five areas of Mexico (One state – Jalisco, and four municipalities – Guanajuato, Michoacán, Nayarit, or Tamaulipas) and be distilled from only one species of agave – Blue Agave.
To be labeled as Mezcal it must be made in one of nine areas of Mexico (Oaxaca, Guerrero, Michoacán, Puebla, Durango, San Luís Potosí, Zacatecas, Guanajuato, and Tamaulipas) but can be distilled from any species of agave, not just Blue Agave.
What about the taste difference? Tequila tends to be more agave-forward, with a smoother, sweeter flavor. Mezcal is often considered to have a more savory and smoky flavor. But aging contributes to a richer flavor profile in Tequila, especially when aged for longer in used bourbon barrels as Tapatío Reposado, Añejo and Excelencia Extra Añejo are.