Many people mix the two mentioned phrases, but they are completely different processes.
Shot or grit blasting is used when we need to prepare a surface for coating, remove rust or create the right roughness. By doing this, we accelerate shot or grit (abrasive media) through a nozzle at high speed. When the particles hit the surface, they displace and remove a small part of its material.
By selecting different abrasive materials, we get different results.
While in the case of shot peening, the main difference is that we do not remove any material, but hit it with round shots. When a shot hits the surface, it creates a small dimple or indentation, releasing stress in the material and closing microcracks so corrosion is inhibited on the inside. That means that material is now stronger and has a longer lifetime.
Blasting vs. Shot peening equipment
Also, the equipment used in each process is different. Of course, regular blasting equipment loaded with shot can provide a similar result, but there is zero control and repeatability to make quantify the shot peening effect applied to the surface. This requires a much more sophisticated machine that can control all parameters in order to ensure repeatable results and a controlled shot peening process. Blasting is usually controlled either visually or by measuring the roughness, while shot peening also requires particles to be accelerated at a specific energy to make sure the process is powerful enough. Additionally, when shot peening, coverage is of utmost importance to make sure no spots were left unpeened as this could easily lead to a weaker final part.
Source: ferroecoblast.com