What is the difference between Jake Brake and Exhaust Brake?

With a Jake brake, the engine is slowed down (manipulation of airflow through the engine by the opening and closing of valves lowers RPM). When downshifting, the change in gearing acts against the engine's forces. The decrease in speed from Jake braking occurs within the engine, and the reduction in speed from downshifting comes from an outside mechanical force.

The Jake brake makes the engine into an air compressor which uses energy rather than produces it. It can increase brake efficiency when used in conjunction with service brakes, or it can eliminate the need for brakes.