Broad strokes, there is a difference but the end result is the same to most users.
PiHole isn't for just blocking ads, though it can do that. It's also a good reporting tool that monitors all outgoing connections / requests from your home network, letting you block certain ones if you want. It just so happens that most folks end up using it to block all outgoing requests for ads. But another common use, for example, is blocking smartTVs from phoning home.
The issue with LS is it's limited to just the Mac it's running on, but when it comes to phoning home and superfluous outgoing connections, IoT devices tend to be the biggest culprits (smart cameras, smart thermostats, smart TVs, smart assistants), along with freemium apps. LS cannot do anything to help you with those, you need a robust router-side rules, or a DNS approach such as PiHole to manage those things.