AWS Managed Policies – predefined AWS Policies with permissions customers cannot change – but with the right privileges they can be assigned to any principal.
Customer Managed Policies – policies created by principals (users etc.) and then assigned to any principal.
In-line Policies – per Amazon: An inline policy is a policy that’s embedded in a principal entity (a user, group, or role)—that is, the policy is an inherent part of the principal entity.
A principal is an entity that can take an action on an AWS resource. e.g. users, groups, roles & applications are all principles.
References:
https://docs.aws.amazon.com/IAM/latest/UserGuide/access_policies_managed-vs-inline.html
https://docs.aws.amazon.com/IAM/latest/UserGuide/intro-structure.html#intro-structure-principal
https://aws.amazon.com/iam/faqs/
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