Properly speaking, caramel is a sauce made from sugar heated up until it liquifies and turns amber-brown. When you add dairy (typically some combination of butter and cream, as in the recipe you reference), it becomes butterscotch. Many products (mis-)labeled "caramel" however (candies, syrup, etc.) contain dairy as well, which is why some people think caramel and butterscotch are the same thing.
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