bt.o is the kernel mode driver. When you insmod bt.o you are inserting it into the kernel, where it can cause bad things to happen if it screws up. btduser is the user mode driver. It runs as an application in user space, where usually the worse thing that can happen is a segfault. You don't have to insmod anything for user mode. You just run the application.
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The OS makes calls to the system kernel (although sometimes the kernel is bundled with the OS). Applications make their calls to the OS, which then makes calls to the kernel.
Technically speaking linux is a kernel. The kernel is the part of the operating system that acts as a middleman/translator between the hardware and the software.
difference between operating system and system software?
Operating System have a major component called KERNEL that is designed to interact with hardware .Kernel acts as an interface between OS Shell & Hardware.
The kernel is the essential center of a computer operating system the core that provides basic services for all other parts of the operating system. A kernel is designed to be a central core to the operating system - the logic that manages the resources that the hardware has to offer.