Hi Anne,
The payment method is how you make any payments and the Pay-out Preference is how you receive payment as a host.
You can use the same or chose different methods for both, so for example, you could set up an Amex credit card as your payment method so if you travel as a guest, payments will be debited to your Amex card. However you can have a different Pay-out preference like PayPal so any money received from hosting goes into you PayPal account.
Hope this clarifies the differences.
Ama