Although people often use these two terms interchangeably, there is a difference between them. Venue is a term that is purely geographic. Jurisdiction has a geographic component to it, but it also has aspects that have nothing to do with geography or location.
Venue is simply a geographic location. A case must be filed in the proper venue. If a contract is made in County A, for example, a lawsuit having to do with that contract must also be filed in County A, not in County B. County A is the proper venue for that lawsuit. Venue, then, is just a geographical term.
Jurisdiction refers to the right of a court to hear and judge a particular case. This does have partly to do with geography. A court in one area may not have jurisdiction over a case from another area. However, this is not all there is to it. Jurisdiction also has to do with what kinds of cases a court has a legal right to hear. For example, a drug court only has jurisdiction over certain drug cases. Any cases that have to do with other subject matter fall outside its jurisdiction, even if they are from the correct geographic area.
Thus, venue is only geographic whereas jurisdiction is based on more than just geography.
There are two types of jurisdiction: subject matter jurisdiction and personal jurisdiction. For any court to hear a case it must have personal jurisdiction over both parties. This is set by the statutes of each state. Generally, personal jurisdiction is limited by state borders because that is the extent of a state court's authority. So, if a plaintiff in state A reads a defamatory story on line let's say in a local paper in state B that was written by a defendant living in state B, a court in state A is not going to have personal jurisdiction over the defendant because the court's authority cannot cross the state line and compel such a defendant to appear in state A's court, even though state A's court has subject matter jurisdiction over defamation cases. Now there are many laws that stretch a court's authority. A defendant causes a car accident in state A while going back home to state B, the court of state A can use its long arm statute jurisdiction to reach into state B and bring the defendant back to state A. Absent a long arm statute, a plaintiff may have to rely on the old adage of suing where the defendant can be found.
Subject matter jurisdiction involves a court's authority over the subject matter of a particular case. Generally subject matter jurisdiction is not a problem at the state level because state courts will hear everything. It is a problem at the federal level though. So, in the first example above a federal court in state B (and state B's state court as well) would have personal jurisdiction over the defendant in state B, the federal court would have subject matter jurisdiction over the case because the parties were from different states, i.e., diversity jurisdiction. Diversity jurisdiction being one type of subject matter. Diversity jurisdiction also requires that the amount being sued for or "amount in controversy" exceeds $75,000. Another subject matter limitation in federal court is "federal question" jurisdiction. A case must be based on a federal statute if it does not meet the diversity requirements. Lack of jurisdiction either personal or subject matter is always fatal to a plaintiff's case. It will be dismissed period.
Venue is rarely fatal. It tends to be an issue where a number of courts have the requisite jurisdiction, the question is which court. A general rule is that the plaintiff gets to pick his forum (court) but depending on the case the plaintiff maybe limited. A real estate dispute must be brought in the county of the real estate. In Pennsylvania, the small county of Cameron does a brisk business in divorces because its filing fees are so cheap: deliberately so. A party in Pittsburgh and a party in Philadelphia can have Cameron County do the divorce as long as neither party challenges the venue. Proper venue would be either in Pittsburgh where the plaintiff is or in Philadelphia where the defendant is. In this instance the court isn't going to raise venue as an issue because it isn't necessarily important. If a party picks the wrong venue the usual remedy is for the court to transfer the case to the proper venue.