Vascular plants, such as trees and grasses, contain a true vascular system used to transport water and nutrients throughout the plant. Non-vascular plants, such as mosses and hornworts, do not possess these tissues and are limited in their size and diversity of habitats.
Vascular plants contain two primary types of tube-like vascular tissues: xylem and phloem. Xylem is used to transport water and minerals from the roots upward; phloem is used to transport organic material synthesized by the plant, such as sugars, downward. These tissues are defining elements of true leaves, roots and stems, but they don't exist in non-vascular plants.
Some older classification systems include algae, certain types of seaweed, cyanobacteria and some fungi as non-vascular plants. These photosynthetic organisms are now excluded from the plant kingdom, belonging instead to Kingdom Monera, Protista or Fungi. The true plants consist of three divisions of non-vascular plants--mosses, liverworts and hornworts--and several divisions of vascular plants, including ferns, cone-bearing plants and seed-bearing plants.
Vascular tissues improve the efficiency of transportation of nutrients and allow plants to live in environments with limited water. Non-vascular plants were the first plants to evolve to inhabit land, and generally live in moist environments.
Non-vascular plants are limited in their ability to perform gas exchange and nutrient transport. This limits the plants' size, and they generally do not grow taller than 5 inches. Vascular plants, however, are not limited in size because of their ability to transport nutrients.