Pork shoulder comes, as you might expect, from the shoulder area of the pig. But then, so too do cuts labeled "pork butt"! Cuts labeled "pork shoulder" (including a "picnic shoulder") are from the thinner, triangle-shaped end of the shoulder whereas the "butt" is from the thicker, more intensely marbled end of the shoulder. As such, pork shoulder is a bit better for cooking whole and slicing whereas pork butt is perfect for making pulled pork and other recipes in which the meat is meant to fall apart.
Yet both pork shoulder and pork butt benefit from long, slow cooking, and are great cut up and used as stew meat and in chilis. And you can, if necessary, use them interchangeably in most recipes.
Note: Many styles and regional variations exist in butchery, so when in doubt, ask your butcher for specifics.
