Budō is a compound of the root bu (武:ぶ), meaning 'war' or 'martial'; and dō (道:どう; tao in Chinese), meaning 'path' or 'way' (including the Buddhist conception of 'path', or mārga in Sanskrit). The term refers to the idea of formulating propositions, subjecting them to philosophical critique and then following a 'path' to realize them.Dō signifies a "way of life". Dō in the Japanese context, is an experiential term, experiential in the sense that practice (the way of life) is the norm to verify the validity of the discipline cultivated through a given art form. The modern budō has no external enemy, only the internal enemy, one's ego that must be fought.
Similarly to budō, bujutsu is a compound of the roots bu (武), and jutsu (術:じゅつ), meaning technique. Thus, budō is translated as "martial way", or "the way of war" while bujutsu is translated as "science of war" or "martial craft." However, both budō and bujutsu are used interchangeably in English with the term "martial arts". Budo and bujutsu have quite a delicate difference; whereas bujutsu only gives attention to the physical part of fighting (how to best defeat an enemy), budo also gives attention to the mind and how one should develop oneself.
It may be difficult to delineate the differences between budō and bujutsu. Sometimes, the differences are considered historical; others cite differences in training methods, training philosophy, or emphasis on spiritual development.
In modern usage, bujutsu, meaning martial/military art/science, is typified by its practical application of technique to real-world or battlefield situations. Budō, meaning martial way, has a more philosophical emphasis.
Many consider budō a more civilian form of martial arts, as an interpretation or evolution of the older bujutsu, which they categorize as a more militaristic style or strategy. According to this distinction, the modern civilian art de-emphasizes practicality and effectiveness in favor of personal development from a fitness or spiritual perspective. The difference is between the more "civilian" versus "military" aspects of combat and personal development. They see budō and bujutsu as representing a particular strategy or philosophy regarding combat systems, but still, the terms are rather loosely applied and often interchangeable.
One view is that a bujutsu is the martial art you practice, whereas a budo is the lifestyle you live and the path you walk by practicing a bujutsu. For example, one could say that Judo and Jujutsu practised as a practiced martial art are one and the same, being that the practice of the art Jujutsu leads to obtaining the lifestyle of Judo (Judo was originally known as Kano Jujutsu, after Judo's founder Kano Jigoro). That would be true with arts such as kenjutsu/kendo and iaijutsu/iaido as well.