I've been tossing this one around for a couple of days since Porto's 5-0 thrashing of Benfica. In Portugal, that game is known as the Classico, while Benfica-Sporting is the Derby. To me there's a subtle difference, to others, maybe not so much.
I think by the strict definition, derbies are between local clubs, i.e., same city or region such as Benfica-Sporting, Celtic-Rangers, Lazio-Roma, Inter-Milan, Liverpool-Everton. Meanwhile, Classicos are huge rival games regardless of geography, such as Benfica-Porto, Manchester United-Liverpool, Real Madrid-Barcelona.
Those are my definitions and my parameters. A lot of people interchange the two, but for the sake of football fandom, I think we should differentiate. I'm all for a good derby (daar-bee?). There's nothing with a little intra-city pride and bragging rights. Generations of fathers, grandfathers and drunken uncles haggle over which club is better and why. It's all about our side of the street versus their side of the street. There's no right answer, of course until the final whistle blows. And God forbid there's a tie, because then both sides of the street certain to take it out on the referees.
Classicos, unlike derbies, are almost certain to give you a cracker of a match. You can't tell when Lazio, or Sporting, or Atletico will be in a down year, while you're always certain that Real Madrid, Barcelona and United will be in close to top form. Is there a better match than Real Madrid-Barcelona? Let me interject a "Hell No". Yet there's nothing binding those two teams aside from a warehouse full of European Cups and billions of Euros worth of footballers. Culturally, these are two diverse cities and peoples, with different agendas and political points of view. On the field, it's brilliance--classic brilliance--and there's almost a direct impact on the ultimate champion in Spain.
I'm not demeaning the derby; but I think someone has to stand up and make the distinction. Derbies are great, but they're insular. If you're not from Madrid, do you care about Real-Atletico? Probably not. But if you're in Taipei or Toledo, chances are you can find some kind of audience for Real Madrid Barcelona.
Do you make the distinction? Maybe you should.