What is the difference between #12 NM-B wire and #12 THHN copper wire?

Same copper, very different rules. NM-B is a complete cable assembly governed by NEC 2023 Article 334: two or three insulated conductors plus a bare ground inside a nonmetallic jacket. THHN is a single insulated conductor governed by Article 310 that must be installed inside a raceway or enclosure, never run exposed or stapled to framing on its own. The twist is that the insulated conductors inside modern NM-B are THHN or THWN wire, the jacket printing on the individual conductors often says so.

The ampacity difference

Both are 12 AWG copper, but 334.80 limits NM-B to the 60 degree C ampacity column, 20 amps for 12 AWG, no matter what the conductor insulation is rated. The 90 degree rating of the conductors inside NM-B may be used only as the starting point for derating calculations. THHN in conduit gets the 75 degree column at terminations, 25 amps for 12 AWG, and starts derating from the 90 degree column at 30 amps. In practice both land on a 20 amp breaker for branch circuits, but THHN has far more headroom when you bundle conductors or run through hot attics.

Where each is allowed

NM-B is for dry locations only, per 334.12 it cannot be installed in wet or damp locations, embedded in concrete, or exposed to sunlight unless listed for it. That is why Romex cannot run through underground conduit to the shed: the inside of a buried raceway is a wet location per 300.5(B). THHN is dry-location wire too, but nearly all modern product is dual-rated THHN/THWN-2, and the THWN-2 rating makes it legal in wet locations and buried conduit at the full 90 degree wet rating.

Cost and labor

NM-B wins on labor in wood-frame residential, no conduit, staple and go, one pull for hots, neutral, and ground. THHN wins everywhere raceway is already required: commercial work, garages with exposed runs subject to damage, underground feeds, and anywhere future circuits might be pulled through the same pipe.

Field notes

Do not strip the jacket off NM-B and use the inner conductors as loose THHN in conduit, the conductors are not individually marked and listed for that use unless the printing says so. And when NM-B lands in a panel with THHN circuits, both still terminate on 60 or 75 degree lugs, torque values do not care what the insulation is rated.