Discreet: having or showing discernment or good judgment in conduct and especially in speech : prudent; especially : capable of preserving prudent silence.
Discrete: constituting a separate entity : individually distinct <several discrete sections>
Well, that's the dictionary's take on it. I tend to think of discreet as something almost secretive, something you don't want to draw attention to. He discreetly handed the key to the girl. I discreetly dabbed at the spill on the counter. It's an action, something you'd have to pay attention to really see. Blink and you miss it. Think of eyes watching you...did they see you?
Discrete always reminds me of concrete. It's a solid, separate entity. Like blocks. And it's the usage I hardly ever need.
After all, it's the subtle things that can make a real difference, right?