ORACLE BASE Vs ORACLE_HOME - Difference between ORACLE_BASE and ORACLE_HOME

Oracle BASE and Oracle HOME are the directories defined by the Oracle Flexible Architecture.  Oracle Base is the top level directory or you can say root directory. Under Oracle Base you can have multiple Oracle versions with different Oracle HOME. You can have multiple oracle products under Oracle BASE directory.
In Oracle 11g, the 11g New Features Guide notes important OFA changes, namely the removal of $ORACLE_HOME as an anchor for diagnostic and alert files:
"The database installation process has been redesigned to be based on the ORACLE_BASE environment variable. Until now, setting this variable has been optional and the only required variable has been ORACLE_HOME.

With this feature, ORACLE_BASE is the only required input, and the ORACLE_HOME setting will be derived from ORACLE_BASE."
ORACLE_BASE - The home directory for the Oracle software (e.g. /data/app/oracle/product/11.2.1) with subdirectories like:

bin
rdbms
sqlplus
etc.
ORACLE_HOME comes under ORACLE_BASE directory.
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