This is a very interesting question asked by one of my students. As far as the syllabus is concerned, we only need to concern ourselves with simple and fractional distillation. As you are probably aware, the underlying principle behind distillation is based on the difference in the substances' boiling point. For example, simple distillation is used to separate salt from water. However, we should not forget that the reason why we are able to distill off the water first is because water has a much lower boiling point than salt. Recall that the chemical formula for table salt is NaCl and it is an ionic compound which has a relatively much higher boiling point. In short, simple distillation is used when the boiling point of the concerned substances vary significantly.
Fractional distillation is adopted when we need to separate two miscible liquids i.e. ethanol and water. This technique is commonly used if we need to separate two miscible liquids that have very similar boiling points (less than 25 degree Celsius difference). Because of this, a fractionating column is needed. In this method, heat is introduced to the mixture until the boiling point of the more volatile solvent is reached i.e. ethanol. The ethanol gas will then travel up into the fractionating column. However, due to the close proximity in boiling point of ethanol and water, the ethanol gas may have contained some 'water contaminants'. After all, evaporation takes place at all temperature. With the supply of heat, it is not a surprise that some of the water may have turned into water vapor at 78 degree Celsius, thus 'contaminating' the ethanol vapor. The purpose of the fractional column is to block the gas from rising further by putting a large amount of 'obstacles' in its path, either by using a series of trays/plates or by filling the column with packing materials. What happens is that the rising gas will condense on the tray/plates/packing materials and become a liquid. Meanwhile, the rising gas from below will heat this condensed liquid and cause it to be distilled again. As a result, an even purer ethanol vapor will travel up to the next level of the column. This process is repeated continuously and eventually a pure ethanol vapor is condensed and collected as the distillate. However, there is one more hidden point about fractional distillation that is not been told to us. That is, the two miscible liquids must not be heat sensitive such that they undergo decomposition fairly easily.
So far, I have not mentioned anything about steam distillation yet =) Now, here comes the difficult part. What happens if the liquid decomposes below its boiling point? If that happens, then there is no way we can use simple or fractional distillation at all because the liquid will already have decomposed before it can be distilled off. Hey, wait a minute! How can a substance decompose below its boiling point? Boiling point is the temperature at which a liquid turns to gas with the molecule's integrity intact isn't it? With decomposition, the integrity of the molecule will have been compromised. So, what are you talking about?
Let me explain. Boiling point is a variable that is dependent on pressure. For instance, the boiling point of a substance increases if the surrounding pressure increases and vice versa. That is why our water boils at approximately 80 degree Celsius when we are in the Himalayan mountains. At high altitude, the surrounding atmospheric pressure is lower. Thus, the water will boil at a lower temperature. The boiling point that we are so accustomed to is actually called the Normal Boiling Point, where the atmospheric pressure is taken to be 1 atm. However, decomposition temperature is independent of pressure. The decomposition temperature measures the strength of the 'intra-molecular' force or chemical bond within the molecule, whereas the boiling point measures the strength of the 'inter-molecular' force between the molecules. Let's take the example of H2O. Decomposition temperature measures the amount of energy needed to break the O-H bond i.e. the bond strength. Boiling point measures the amount of energy needed to break the intermolecular forces of attraction (also known as the hydrogen bonding) between the water molecules and this value is affected by the surrounding pressure.
Let's imagine liquid X decomposes when the temperature hits 50 degree Celsius and it has a normal boiling point of 70 degree Celsius, say in Singapore which has a pressure of 1 atm. If I were to bring liquid X to the Himalaya mountains, it will have a lower boiling point of 40 degree Celsius. What does this show? This shows that I can perform fractional distillation on liquid X (its b.p is less than its decomposition temperature and that of water) and water because liquid X can be distilled off first without undergoing decomposition. However, if I were to perform the same technique on liquid X and water at 1 atm pressure, say in Singapore, it will not be possible. This is because liquid X will decompose first at 50 degree Celsius before it can be distilled at its boiling point of 70 degree Celsius!
To overcome this problem, steam distillation is used. It is used to separate two miscible liquids which are highly heat sensitive and may possibly decompose below their boiling point. It is commonly used in the extraction of essential oils.
The above diagram illustrates the same concept as well.Good question and please keep the questions coming!