The difference is PeopleSoftListeningConnector and PeopleSoftServiceListeningConnector are two different programs - Java servlets. They both live on the web server in the PSIGW or PSIGW.war (Integration Gateway) container but do different things.
You can think of the gateway URL (including the PeopleSoftListneningConnector as the general pathway to your PeopleSoft instance, it just responds with the PeopleTools version and gateway status.
The target location URL needs to point to a servlet that can process SOAP (XML) requests, i.e., PeopleSoftServiceListeningConnector. Web services use SOAP and therefore this connector.
Having the above settings incorrect is an issue and you should fix them up accordingly.