The idea of literate programming -- a program can be a piece of literature -- is due to Donald E. Knuth who is extremely respected figure in programming community (and also among combinatorics and computer science people). In this paradigm, one does not write a program based on how computer would reason about it but rather follows a human-like flow. It is the job of literate programming tool to convert this human-readable program into something which make sense to a computer. Since the translation process is governed by a computer program, there are specific constraints on how to write a program in literate way.
Best way to understand the difference is to look at a literate program. One can find many. A program is written like an essay, and one then uses a tool to extract code (this process was called tangling by Knuth) or documentation (weaving) out of it. Knuth, true to his nature, wrote cweb for his personal use and used in this personal work. Other used it if they liked. Some other tools cropped up and many of them were written for pacific languages. Noweb, written by Roman Ramsay, is language agnostic. There are some other tools like it e.g. funnel-web, nuweb etc but none is as simple to use as this one. Lyx also have support for noweb. And if my memory serves me write, IIT Madras, offered (or still offering) a course in literate programming to its students using Lyx.
Literate programming did not really catch up (who wants to write documentation in the first place). But some people have used it extensively. To my knowledge, apart from Knuth, Columbia Esterel Compiler (cec) is written as literate program using noweb and its really easy to understand. I myself have made some changes to it for personal use.
THIS IS FOR INTERMEDIATE USERS OF NOWEB (IF ANY) :%file:include/global.h <<global.h>>= // whatver is there in global @ %def global.h
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