Formal VS. Informal - Tú VS. Usted (Ud.)

Both tú and Usted mean "you". However, we use tú when talking to a FRIEND and is probably around the same age as you.
We use Usted - abbreviated Ud. - when we are talking to and OLDER person or an ADULT. Using the formal version you are showing respect to whom you are speaking to.

Tú = You                              Usted(Ud.) = You
Informal                                        Formal

Real-life application
When you are asking someone...How are you? (¿Cómo estas?)

Person 1: ¿Cómo estás (tú)? -- Informal (Use when asking a FRIEND how they are doing.)
                    ¿Cómo estás (Ud.)? -- Formal (Use when asking your PARENTS and/or an OLDER person how they are doing.)

Person 2: Más o menos -- (Alright)
                 ¿Y tú? -- Informal (And You?)
                 ¿Y Usted? -- Formal (And You?)


Person 1: Bien, gracias. -- (Well, thanks)