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In the case of both cyberterrorism and physical terrorism, the perpetrators make their attacks outside the bounds of conventional warfare. Terrorists make their attacks in places not ordinarily regarded as fields of battle and on persons not ordinarily regarded as military personnel (e.g., a person dressed as a civilian blows himself up in a crowded disco; persons dressed as civilians highjack commercial airplanes and fly them into civilian targets, such as the World Trade Center).
I would say that cyberterrorism differs from physical terrorism in that the former primarily involves attacks against information contained within computers, whereas the later involves attacks against persons. Persons dressed as civilians who blow themselves up on a bus would be physical terrorists because they aim to destroy human life.
Cyberterrorists would most likely use computers or some similar device to attack the information held in another computer. For example, imagine the chaos that would occur if a cyberterrorist caused the stock market to appear to crash by hacking into the computers of a major brokerage and placing fake "sell" orders.
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