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Pressure balance valves use one handle to control both volume and temperature. It reacts to changes in water pressure to maintain the pressure ratio (hot/cold). So when the joker in your house flushes the toilet while you're busy rinsing the conditioner out of your hair, the mechanism inside the pressure balance valve will reduce the hot water, maintaining the balance between hot and cold water flow.
Thermostatic valves have two handles: one to control temperature and one to control volume. You can adjust the flow of water without it affecting the temperature. The temperature of your water will never exceed the maximum set temperature output even if your water heater is set at a higher temperature.
Bottom line, a thermostatic valve senses and controls the actual temperature of the water while a pressure balanced valve senses and controls the ratio of hot to cold water.
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