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From the point of view of the design, a spotting scope and a telescope are not very different altogether.
Both are used for magnification and are constructed with an eyepiece lens and an objective lens. Both are used to be able to see long distance images clearly. Both the spotting scope and the telescope are designed in such a way that they can be mounted on tripods. However, this is where the differences arise.
The basic purpose of a spotting scope is to observe terrestrial targets, whereas that of a telescope is to study celestial objects. Spotting scopes are lighter to make them portable and are armed with rubber reinforcements. They also sport a more ergonomic design, as compared to telescopes, and are more rugged and durable. As compared to an astronomical telescope, a spotting scope has lesser magnification and a smaller aperture. However this enables the spotting scope to have a wider field of view.
Telescopes are optimized for being placed at one place and hence tend to be heavier than a spotting scope. A major difference between the two is that spotting scopes are designed to be mounted on generic camera tripods while telescopes require special mounts, which are quite expensive, to support them. The image produced by a telescope is always inverted and a spotting scope always produces a right side up image.
How to decide whether to use a telescope or a spotting scope? As mentioned earlier, a spotting scope is meant for terrestrial observations. Typically, when there is a need for high magnification, a spotting scope is chosen over a pair of binoculars. Due to the wider field of view that spotting scopes offer, as compared to telescope, they are better suited for observing moving targets. This makes them ideal for birding, hunting, surveillance etc. Spotting scopes are also used with guns for targeting. They can also be paired with a camera to shoot pictures of distant objects. In fact a spotting scope can also be used for star-gazing but will not provide as much clarity as a telescope would.
Astronomy telescopes are far better suited at observing stationary objects due to their narrower field of view. Also, due to their greater aperture and magnification than a spotting scope, they are suited for viewing objects at great distances such as stars, planets and the Moon. Although a telescope can be used to view terrestrial objects, it is not a recommended practice as not only is a telescope bulky but also produces an inverted image.