Why 2 kinds of AppFabric?

It is unfortunate that Microsoft have decided to refer to both of these things as a type of App Fabric. AS Phil writes the Azure version is for the Azure Cloud and the Windows Server version is for your own machines.

Unfortunately the features between them are different and so you cannot simply move from one to the other. I say unfortunate as we wanted to use a part of the Windows Server AppFabric, the distributed Cache (previously referred to as velocity, a much better name), on the cloud, and it is not available yet.

My understanding is that there is common ground between the teams, and that features are written for the Azure product first, then added to the Windows Server product.

The distinction between them is that Windows Server AppFabric is designed for internal company use, inside the firewall, whereas Azure AppFabric is the out and out cloud product.

Can you switch between them to just use the Azure piece in times of high load in the way you suggest? I don't believe so, but I'm happy to be corrected - the Azure side isn't something I've looked at in depth.