What is the difference between an OVA and an OAV? I've heard the terms OVA and OAV used interchangeably with one another, but is there a distinct difference between the two?

Do the definitions differ in Japan versus overseas? Where did the two acronyms originate?
OVA and OAV are synonymous. The reason for having two acronyms is historical; currently, both Japan and English-speaking countries use "OVA" as the official designation.

According to the Japanese Wikipedia (rough translation):


  In the early days, "OAV" (short for "original animation video") was often used as well, but "AV" and "Adult Video" were easily confused, and could be easily mistaken for "Audio/Visual", so it gradually became less common.


The English Wikipedia sums this up slightly more succinctly:


  Original video animation, abbreviated as OVA media (and sometimes as OAV, original animated video, by English-speakers, though it was mistaken for "Original Adult Video"), are animated films and series made specially for release in home-video formats.


Basically, the media was initially dubbed "OAV" for "original animated video". However, because of the term "adult video" (which implies pornography or mature material), and the ability to be easily confused with the common film/animation term "audio/visual", the last two letters were switched to form OVA (original video animation).