The key difference between Zoho Reports and Zoho Creator is in-depth reporting and analytics vs online custom database application creation.
Zoho Reports enables you to easily create powerful and sophisticated reports with your data by creating online reporting applications. It enables you to slice & dice your data for in-depth visualization and business intelligence. Zoho Creator enables you to quickly create a powerful online database application to collect data and trigger work flows through forms and scripting.
Zoho Reports could act as a convenient back-end reporting/analytical database for your application needs. You can get data into Zoho Reports through manual data entry or bulk load data from files or upload data stored in your local databases (like MS Access, Oracle, SQL Server & MySQL) or schedule for periodic upload of data or push data from your application through Web API (HTTP based) for reporting and analysis. Here the crucial difference is that, while Zoho Creator offers a hosted programming environment (with a DB backing), Zoho Reports offers a powerful reporting layer (backed by an analytical database) for your application data.
Zoho Reports will also support full-fledged relational modeling (similar to relational/analytical databases) very soon. It currently supports minimal relational modeling functionalities through Lookup columns. With lookup columns you can relate one table with another. It also offers cascade-on-delete functionality whereby when a row in the parent table is deleted, it will automatically delete all the related rows in the child table(s).
The other key difference is that Zoho Reports embraces SQL, and supports all major dialects of it. This enables users to do sophisticated querying on the data for creating powerful reports. We will flesh out this functionality even further in future updates.