Hi

Time off refers to the actual leave or absence taken by an employee from work. It represents the duration during which an employee is not present or available for work due to various reasons, such as vacation, sick leave, personal time, or other approved leave types.Allocation refers to the process of assigning or granting a certain amount of time off to an employee for a specific purpose or leave type. It involves the allocation or provision of a predetermined number of days or hours that an employee is entitled to take off within a given period, usually a year. You can refer to the blog:

https://www.cybrosys.com/blog/a-complete-overview-of-the-odoo-15-time-off-module

Hope it helps

Allocation allows you to assign to an Employee a certain number of leaves of a certain type and time off is where you actually apply for leave.If a particular leave type is having no limit for allocation you can apply for leave without any restrictions in number of leaves.