PRINCE2 can be used in any type of project but the common question is how best to apply PRINCE2 to run a specific project. Tailoring refers to the appropriate use of PRINCE2 in any project. So tailoring answers the following question: What is the correct amount of planning, control, themes and processes to use?
Embedding focuses on the adoption of PRINCE2 across an organization, so it is concerned with standards, procedures, integration and so on, while Tailoring is done by the Project Manager to adapt the method to each project.