When I started posting work online again, I started reading around the Lit category on deviantArt to see what was going on around the community. I nearly regretted that decision on my first day because I found two problems: Some writers don’t understand what a short story is, and even worse, many had no idea what a chapter is.
Despite the fluidity of its potential uses, the short story is easier to tackle. A short story is a standalone story, usually no longer than 20,000 words, with a clear beginning-middle-end structure and a single, self-contained problem that has been resolved by the end of the story.
A chapter is a complete set of actions within a story. The chapter has a clear beginning-middle-end structure that fits within the structure of the larger story, and some smaller issue from either the main plot or a subplot has been resolved by the end of the chapter. A chapter cannot stand on its own; it loses its context without the story it belongs to.
All of that said, there are exceptions and workarounds…to a point. There are authors who have built novels out of short stories that chronologically follow individual adventures in a larger quests (Dilvish, the Damned is an excellent example). There are always short story anthologies that can be compiled around a theme, character, setting, or event, but unless a short story has been broken into parts for some reason (often because the various parts fit within different sections of the anthologies timeline) there really isn’t a chapter feeling to them.
When you’re writing, it’s important to think about what form you’re writing to and then set up a beginning-middle-end structure and an appropriate problem and resolution, and then deliver that. It makes for stronger short stories. It makes for stronger chapters, which in turn can contribute to stronger novellas and novels. And it makes for a more enjoyable reading experience.