The differences between the Spanish language of Spain and Spanish from Latin America are something like the differences between British English and American English. People from the Spanish-speaking world can communicate with others as easily as people throughout the English-speaking world can. Although there are differences between Spanish from Spain and Latin American Spanish – particularly relating to pronunciation – they do not prevent mutual intelligibility. Here you can experience the regional differences and dialects from all the Spanish World.
Latin American dialects are noted for the pronunciation of each letter and their strong "r" sounds. This kind of Spanish was spoken in Spain in the XVIth and XVIIth centuries, and was taken to the Americas by the early colonists.
However, the Spanish of North of Madrid in Spain, called Castilian, developed characteristics that never reached the New World. Castilian is the Spanish equivalent of High German or the Queen's English. The differences with Latin American Spanish include the pronunciation of "ci" and "ce" as "th". In Castile, "gracias" (thank you) becomes "gratheas" (as opposed to "gras-see-as" in Latin America). Also, speakers in some areas like Argentina often pronounce the ll and y like the "s" in "measure." In some areas, you will hear speakers drop s sounds, so está sounds like etá. In some argentinian and Uruguayan areas, the j sounds like the "ch" in "loch".
Another difference is the use of the word "vosotros" (plural you) as the informal form of "you" in Spain. Latin Americans never use "vosotros," favoring "ustedes" instead.
But if you avoid slang or extreme colloquialisms, standard educated Castilian Spanish is understood anywhere in the Spanish-speaking world.