As much as the difference between living somewhere and residing somewhere. Practically nothing.
Except that lakok is much more common in Hungarian than reside is in English.
That is correct. Based on the frequency of usage, "Where do you live?" should be translated as "Hol laksz?".
Literally, "lakni" means "to reside", "to have a place to call home" somewhere. Not surprisinly, one's home is also called a "lakás" (not so much indicating the type of property, than just the living space, wherever it is).
"Lak" - the root of the verb
"-ás" - a suffix that creates a noun from a verb