When I do a reset, it is usually to try to fix something weird going on. I have only done it a few times, and I dont think ever after an update. When I first got my MY I had a radar issue that was keeping AP/FSD from working. Naturally I thought it was the break in period at first, so I didnt worry about it until later. Then I tried a soft reboot, and it didn't fix it. Drove a bit more and then tried a hard reboot, and it was still broken. As it turns out, I had a bad radar from the factory and the reboots were done in vain.
But to answer your question, as I understand it, a soft reboot is like a windows shutdown/restart command. It shuts down the OS but may keep things in memory, power still to motherboard, etc. A hard reboot is like a full power off shutdown, let it sit for 10 seconds and reboots. Thus clearing anything in RAM or temp files.
Now I know our Tesla's are not Window's PC's but it is a good analogy to what the two differences are.
Then of course, the worst case option is a factory reset thorough the screen, but I haven't ever needed to do that yet.
Pretty much all I do is use a soft reboot for things that are acting up (camera not turning on, etc).