Tequila is a distilled liquor made from the sap of the agave plant. It's a controlled appellation, meaning that it's produced only in designated regions and meets stringent government standards for quality. Agave liquor which does not contain at least 51% spirits distilled from the pulp of the blue agave plant (agave tequilana weber) from the designated regions and is not subject to standards may only be called mezcal.
The designated tequila-producing region was once only the areas surrounding the town of Tequila or Tepatitlán in Jalisco, but because of tequila's popularity, the region has been expanded to include the states of Michoacán, Tamaulipas, Nayarít, and Guanajuato.
The base of a mature agave plant is steamed in order to extract the sap. The sap ferments for about 10 days, producing pulque. This first fermentation is called the "mother pulque", which is then added to fresh sap and allowed to ferment again. This final pulque is then double-distilled in pot stills, and the resultant vino mezcal can be bottled immediately as a tequila blanca (white tequila).
Vino mezcal may also be aged in oak casks, producing the darker reposado (rested) and añejo (aged) grades of tequila.
White (or "silver") tequila, with its crisp, distinctive agave flavor, is best for Margaritas. Añejo, aged for smoothness but with strong oak overtones, is for sipping only. Reposado may be used for mixing or sipping.
José Cuervo, the largest exporter of tequila to the U.S., markets its own grades on the labels of its exported products. Both the "White" and "Tradicional" are both white tequilas, but "White" has a diluted, barely noticeable agave flavor, while "Tradicional" tastes more like real tequila. "Especial" is supposed to look like a reposado, but it's really a white tequila with added caramel, and is also marketed as Cuervo Gold. (A native of Mexico would never order a gold tequila, knowing that it's a counterfeit reposado). The "1800" is a reposado-añejo blend, and "Reserva de la Familia" is an expensive añejo.
The most expensive tequila will say "100% blue agave" on the label, and if it's añejo from the state of Jalisco, expect to pay even more.
In comparison to tequila, mezcal tastes like homemade firewater. And the agave worm included in some bottles hardly improves the flavor. However, if you want a taste of the history of Old Mexico, to dream of riding with Pancho Villa, and to hearken back to the untamed, lawless badlands of the Sonora desert, buy a bottle of mezcal and ask your buddy to hit you over the head with it.