Web design refers to layout, graphics, color, and position. Web designers use tools like CSS and Photoshop. They are often tasked with finding the best way to display data or the user interface components that come from web developers
A web developer creates tools that accomplish tasks. S/he works with the nuts and bolts of gathering, storing, securing & retrieving data, and the user interfaces that allow this. They work with network protocols, server configurations, programming languages, the file system, and markup code. In short, web developers make things like online store-fronts, web-based email clients, interactive maps & searches, photo & video galleries, conference registration.
The haziness of the distinction between these two comes from the fact that many people like or are required to do both of these jobs. Many people do a little of both. Many people do a lot of one and none of the other. Some do a lot of one and a little of the other. Few people seem to have the desire and proclivity to do a lot of both. I have the possibly dubious distinction of being one of these people. I enjoy thinking both on aesthetic levels and abstract logical levels. This is good for my line of work, since I end up having to wear many hats.