Phonology

Phonetics and phonology both can generally be described as the study of speech sounds.
Phonetics:
Specifically the study of how speech sounds are produced, what their physical properties are and how they're produced.
Phonology:
The description of the systems and patterns of speech sounds, based on a theory of what every speaker of a language unconsciously knows about the sound patterns of that language.

The study of the structure and systematic patterns of sounds in human language.

Three major units of phonological analysis are:

Segments: 

Individual speech sounds.

Syllables:

Units of linguistic structure that consists of a syllabic element and any segments associated with it.

Features:

Units of phonological structure that make up segments.

The Phonological system of a language includes:

• an inventory of sounds and their features
• rules which specify how sounds interact with each other. 

Phonology is just one of several aspects of language. It is related to other aspect ( phonetic, syntax etc).

Difference between phonetics and phonolgy

Phonology is the study of how sounds are organized in individual languages. On the other hand, Phonetics is the study of actual process of sound making. Both are important areas of study of linguistics. Phonetics and phonology are two sub-fields of linguistics dealing with speech sounds.Both of them seem to be overlapping in recent years, and therefore create some confusion regarding their meanings.
Phonetics has been derived from the Greek word phone, meaning sound/voice. It is one of the important branches of linguistics which  deals with the study of speech sounds. It covers the domain of speech production and its transmission. It also covers the reception aspect of speech. The sounds made by us when we talk are studied through different branches of phonetics like Acoustic phonetics, Auditory phonetics and Articulatory phonetics. Phonolgy is another branch of linguistics which focuses on the organization of sounds by studying speech patterns. The key words for describing phonology are distribution and patterning related to speech. It is aimed to determine the sound patterns of all the languages. Phonologists may look into questions like- why there is difference in the plurals of cat and dog, the former ends with an /s/ sound, whereas the later ends with the /z/ sound. Phonetics deals with the physical description of sound, whereas phonology is all about description of sound interrelation and function.

A simple way to understand both is to consider phonetics as the physics of sound and phonolgy as the psychology of sound.

Phonetics looks into speech sounds of a language in a generalized and idealized manner. On the other hand , phonolgy looks into the functional  aspect of speech sounds in that language. Phonetics and phonology  are closely related to each other, and therefore it is often recommended not to divide them on the basis of strict rules or points.

Major concepts in Phonology:

1. Phone:

Within phonetics a phone is:

• a speech segment that possesses distinct physical or perceptual properties,
• the basic unit revealed via phonetic speech analysis,
• any speech sound in human language.

2. Phoneme:

The sound as represented in memory (/...../). The phoneme can be studied in two ways.

• as independent sound [t], [d], e.g. bride [braid], bright [brait]
• as a variant of a sound, e.g. let us-let them sound [t] pronounced differently as two variations of one sound [t]. It's called allophone. The phoneme is a minimal linguistic unit realized in speech in the form of sounds, which can be opposed to other phonemes.

Any of the distinct units of sounds in specified language that distinguish one word from another, for example p,b,d and t in the English words pad,pat,bad and bat.

 The phoneme is a functional unit, it does no have any inherent meaning by itself, but when you put phonemes together, they can make words. Phonemes are customarily written between slashes, thus /b/ and /p/. Different languages have different phonemes. Here are examples of the phonemes /r/ and /l/ occurring in a minimal pair:

• lip
• rip

The phones [r] and [l] contrast in identical environments and are considered to be separate phonemes. The phoneme [r] and [l] serve to distinguish the word rip from the word lip. There are 44 phonemes in English. Despite there being just 26 letters in the English language there are 44 unique sounds, also known as phonemes. The 44 sounds help to distinguish a word or meaning from another. Various letters and letter combinations known as graphemes are used to represent the sound.

3. Allophone: 

The sound as actually produced by a speaker ([...])

Allophone is any of the various phonetic realization of a phoneme in a language, which do not contribute to distinctions of meaning. For example, in English as aspirated p(as in pin) and unaspirated p(as in spin) are allophones of p, whereas in ancient Greek the distinction was phonemic.

Allophone, one of the phonetically distinct variants of a phoneme. The occurrence of one allophone rather than another is usually determined by its position in the  word (initial, final, medial etc.) or by its phonetic environment. Speakers of a language often have difficulty in hearing the differences between allophones of the same phoneme, because these differences do not serve to distinguish one word from another. In English the /t/ sound in words hit,tip and little are allophones. Phonemically they are considered to be the same sound, although they are different phonetically in terms of aspiration, voicing and point of articulation. In Japanese and some dialects of Chinese, the sounds  f and h are allophones. For example;
/t/ a phoneme of English

[t^h] an allophone of /t/ in English

[t] an allophone of /t/ in English

We say that [t^h] and [t] and allophones of the same phoneme (namely /t/).