Most people notice the difference between Power of Attorney ("POA") and Guardianship right before they decide to schedule a consultation. They are surprised that their power of attorney document doesn't give them the power that they originally expected. In a nutshell, a POA is voluntary, and revocable, and Guardianship is court-ordered and not revocable.
If I give my sister a POA, she would be able to make decisions (according to the powers designated by the POA) until I revoke her power. If at any time I change my mind, I can just rip up the document in front or her and tell her that she's out.
Guardianship becomes necessary when A) one does not have an estate plan and they become too far incapacitated to start an estate plan, and B) when one does not allow for their loved ones to keep the POA and/or decide to make decisions that one normally would not make if they were in their right state of mind. Guardianship is done (at least in NC) by hearing and a Guardian ad Litem is assigned to make a recommendation at the hearing as to what is in the person's best interests. Guardianship can only be reversed by a subsequent court-order, which is protection against someone that continues to make bad decisions for themselves.
-Attorney Ryan T. Smith