Sealed pedals use a cartridge bearing that has a simple seal to help keep out dirt and contamination.
Unsealed pedals use loose ball bearings. The loose ball bearings are not inside a sealed cartridge and are more vulnerable to contamination.
Here’s what an unsealed pedal looks like
Here’s what a sealed pedal looks like
One practical difference is that you’ll have to overhaul unsealed pedals more often to replace the contaminated grease. Unsealed pedals need to be overhauled too, but generally not as often.
Another practical difference is that unsealed pedals are generally more durable for things like pedal grabs and grinding.