LaTeX (pronounced Lah-tech) is an open source markup language used for typesetting a large variety of documents types. The advantage over any other word processor is that it has good control over large documents and complex layouts documents, allows typesetting of complex mathematical formula, special fonts or characters, tables and figures, as well as typesetting of multi-lingual documents. LaTeX also facilitates automatic generation of bibliographies and indexes.
For these reasons, LaTeX is preferred in science and engineering writing.
BibTeX is a reference management software used in conjunction with LaTeX. With BibTeX, each reference is typed once, and citations and reference list are created in a consistent output, in a style of your choice.