Dataset is in memory representation of the Database. where 
you can create tables, relations between tables, add 
primary key to tables and also manipulate the data 
retrieved form the database. It allows us to work in 
connection less environment.

Datareader is like forward only readonly cursor, which is 
used to retrieve data. data manipulation is not possible 
while using datareader. datareader continously keeps the 
connection open.

dataset is a connectionless service but data reader is a 
connection oriented service..

A ds (dataset) can be used when the connection is closed.
A dr (datareader) needs the connection open to be used.
 
A ds can be used to modify or delete or insert data in the 
database. 
A data reader can be used only to read data

A ds can let you access the info on any order at any time.
A dr lets you access the info only one time per item and 
only in a sequential order.

A ds data can be loaded in longer time than a dr can be 
loaded at.

A ds can contain separated and structured data from several 
database tables. 
A dr can contain data in one register per item, that 
register can include data from serveral tables id the sql 
select statement so indicates, but it has no separate 
structure per table.