Capsule Connect provides a Layer3 VPN which establishes a secure connection to the corporate network, enabling remote users to access network resources as if they were physically located in the office. On the other hand, Capsule Workspace provides a secure environment that acts like a desktop, giving users access to corporate applications and data. This distinction highlights how Capsule Connect focuses on secure connectivity, whereas Capsule Workspace offers an all-encompassing secure workspace with application access.