What is the difference between factory-made cheese and processed cheese?

Processed cheese is made from traditional cheese and emulsifying salts, often with the addition of milk, preservatives, and food coloring. Processed cheese may blend more than one natural cheese. In the United States, one of the better known varieties is American cheese, which is sold in both sliced and unsliced formats.  Processed cheese melts very smoothly. It is generally considered a semi-hard cheese.
 
Source(s):
National Dairy Council "Cheese"
Wikipedia.org "Cheese"