Invisibility makes you completely invisible, but as soon as you attack, use an object, touch something, use other spells etc. you'll become visible again.
Chameleon is more like blending into the environment, and you can do so in various degrees, like 50% chameleon. It will be more difficult for others to see you, especially when sneaking.
If you manage 100% chameleon with spells or enchanted items, you will become completely invisible, and you will stay invisible even when attacking etc. It makes you pretty über, in other words. You can walk around in the middle of enemies without sneaking and do what you want, generally.
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Do not take me for a conjurer of cheap tricks!
Gandalf
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