As Alan has described.

A CFD is essentially a form of future with no expiry. You hold a derivative of the underlying stock.

A spread bet is very similar, but you hold your position based on £pp (Pounds per point or whatever ccy you bet in), and it is in essence a bet on the movement of a stock.

Both forms are leveraged - in other words you only have to put up a small percentage of the consideration of the position in order to open it - this is your initial margin.

The key difference, and the reason we have so many large clients who hold spread bet accounts is that sb aren't subject to Capital Gains Tax, where CFDs are.