Windows Defender is just anti-spyware, whereas Microsoft Security Essentials is a full anti virus program. This MS website might help explain it as well.
For some unknown reason, Microsoft seems to take great delight in confusing people by using the same product names for different products. Ranger4's explanation was spot on for MSE vs. Windows Defender as it pertains to Windows 7. Windows 10 also has a Windows Defender which is a full anti virus built in to the operating system. In fact, Windows Defender as used in Windows 10 is pretty much a renaming of Microsoft Security Essentials.
This isn't the first time Microsoft has used confusing product names. They have an "Outlook" email program that is part of Microsoft Office, and a website called Outlook<dot>com which is a web-based email you can access via your browser (like gmail or yahoo mail.) And speaking of emails, let's not forget about Windows Mail, Windows Live Mail, Windows Live Hotmail and MSN Hotmail.
I'm not the sharpest knife in the drawer. IMHO, Microsoft isn't making things any easier by using the same (or very similar) names for entirely different products. "My mama always said, Microsoft is like a box of chocolates. You never know what you're gonna get." (Apologies to Forrest Gump.)
