"Legal tender" means the government has imposed a requirement that the notes can be used to pay public or private debts.

"Banknotes" are issued by banks. Those banks can be the designated national bank (such as the U.S. Federal Reserve), or they can be banks without such a designation. They are typically issued subject to some level of regulation (for example, the government might allow a bank to issue notes if it keeps adequate reserves to cover the issuance).

In most developed nations, though, banknotes are issued from a single bank and they are declared by the government to be legal tender. Technically, U.S. currency issued by the Federal Reserve Bank is a "banknote" (issued by a bank), but it has also been declared to be legal tender. At one time the Treasury Department also issued its own currency; those were not banknotes, but they were legal tender.

In the U.K., notes issued in Scotland, Northern Ireland, or Wales are not considered legal tender in England, although some places will accept them (particularly airports or places with a lot of tourism). It would be like accepting Canadian currency in the USA - no one is required to do it, but casinos along the border (and some businesses in border cities like Buffalo or Detroit) might do so as an accommodation for their customers.