I don't understand the differences between Iaido and Kendo. If I compare any other Japanese martial art, like Karatedo and Judo, the differences are obvious.
Why are there two different Japanese martial arts related to swords?
Truthfully there are three: iaido, kendo, and battou-do. They differ on their focus or in their origination.
Both iaido and battou do practice with edged katanas and engage in a practice known as tameshigiri. Typically, you practice on rolled up used tatami mats that have been soaked in water over night. Beginners are told to practice on "half mats" which have a lot of give to them. If the technique is off, you won't be able to cut it. When you are proficient with the half mats, you can graduate to the full mats. Full mats are less forgiving, and can bend swords if the student is not careful.
With both iaido and battou do, beginners may be instructed to practice with an iaitou. The iaitou looks and feels much like a proper katana, but the blade has no edge. It is forged with a metal that is too soft to take an edge. This prevents a student from accidentally cutting their hand during notto (sheathing), but it is still dangerous as a blunt weapon.
Kendo uses a shinai. Shinai are the bamboo "blades" that have some give to them. While they hurt when you are struck, you typically won't suffer from broken bones or cuts. Kendoka (kendo students) also use a type of armor for further protection.
Both iaido and kendo are more traditional arts dating back to samurai times. Battou do is more modern.
NOTE: There is more than one way to write traditional Japanese words using English letters (known as romaji). I used the form that takes the long "o" and writes it as "ou". When searching you may try dropping the final "u".
The main difference between the two is that Kendo is a competitive sport, whereas Iaido is more of a traditional art. Since Iaidokas often practice without a real opponent (katas) they don't use any protective gear. Iaido beginners usually start with wooden swords and then progress up to blunt metal blades (intermediate), and then to sharp blades (only very experienced practitioners). Because Kendo is a sport with matches, it is practiced with bamboo or carbon fiber swords and kendoka do wear protective gear.
I'm not sure about the history between the two, so I cannot explain why they are different or how they came to be. You'd better check wikipedia for that:
Kendo is hitting real people with a pretend sword.
Iaido is pretending to hit people with a blunt sword.
Tamashigiri is really hitting pretend people with a sharp sword.