Typically, all life forms were separated into prokaryotes and eukaryotes until American microbiologist Carl Woese divided Prokaryotae into two groups (Archaea and Bacteria) and pioneered the three domain systems of life. The prokaryotes include bacteria and archaebacteria, while the eukaryotes include diverse life forms like animals, plants, fungi and protists. This broad classification, at the same time, completes the six kingdoms of life forms as well. Each kingdom is again divided into phyla, subphyla, class, order, family, genus and species, in the decreasing order of their ambit or spread.
Prokaryotes are unicellular organisms with smaller cell sizes. Their organelles (ribosome being the sole member) lack a cell membrane, and as such are capable of executing simple metabolic functions only. Prokaryotes have no nucleus and are forerunners to eukaryotic cells in the tree of evolution. Their genetic materials are composed of DNA that is single-stranded and circular. The DNA floats in the cytosol unprotected. While some genes are stored in the DNA itself, many important genes of the prokaryotes may be stored in separate circular DNA structures called plasmids. The cytosol, however, is protected by a membrane. Examples of prokaryotes include all bacteria and archaebacteria (bacteria capable of thriving in extreme environments, like the one believed to have existed in the early days after the creation of the earth).
Eukaryotes, on the other hand, contain organelles which are membrane-bound structures within a cell that have specific functions. Compartmentalization allows these organelles to perform distinct and complex functions, isolated from other activities. Golgi apparatus, endoplasmic reticulum, lysosomes etc. are examples of such organelles, as diverse physiological functions have been assigned to each. Eukaryotes have a nucleus with a nuclear envelope. Their genetic material is double-stranded DNA. The eukaryotic DNA is highly organized and can form chromosomes. All the genes are packaged into the DNA and then into the nucleus. The eukaryotic cells are much bigger and more complex than prokaryotic cells. Eukaryotes can have mitochondria or chloroplasts (plants), cell membranes or cell walls (plants). Unlike prokaryotes, eukaryotes can be uni- or multi-cellular organisms. Examples of eukaryotic life forms include animals, plants, fungi and protista.
In spite of such marked differences, they have widespread similarities too. Both prokaryotes and eukaryotes contain all four biomolecules: lipids, carbohydrates, proteins, and nucleic acids. Both have ribosomes, DNA, and similar metabolism. Both prokaryotes and eukaryotes can be unicellular and both have cell or plasma membranes.
A living being is one which, among other features, has a distinct metabolic system. Viruses are not considered to be "alive" because their metabolic machinery is borrowed from the host cell and they reproduce only inside a host cell. Otherwise, they behave like "dead" wandering spores. Hence viruses are not considered for listing in any phylogenetic classification of life forms.