As development proceeds trough cell proliferation, migration and differentiation, the number of different cell types in the embryo increases. Progenitor cells are progressively committed towards specific cell types.

Cell fate describes the range of cell types a progenitor cell can give rise to during normal development. 

Cell potency describes the  repertoire of cell types a progenitor cell can give rise to in all possible environments (e.g. a cell can differentiate in a different type compared to its "normal fate" if it is experimentally grafted in an ectopic region of the embryo). In animal development, cell potency is progressively restricted (from totipotent to unipotent) until a cell becomes terminally differentiated. 

As cell potency becomes restricted following each decision in the developmental hierarchy, cells are said to be committed to a certain fate and eventually differentiate in a specific cell type. 

Although commitment is a continuous process, developmental biologists identify different stages in cell commitment as shown in the figure below.