What is the difference between Indicator Plugin and Notification Area?

I don't really understand why Ubuntu has two "notification area" style things that seem to serve the same functionality.

I can't use only one because some of the programs seem to only work with Notification Area (e.g. Orage) and some only work with Indicator Plugin (e.g. indicator-sound). I noticed that the network manager applet will prefer to insert itself into Indicator Plugin and if that isn't available, try Notification Area.

I don't understand why we have/need both? Is it normal to keep both running?

Is it normal? Yes. Why? For the exact reason you've described: some things don't support IA.

Notification Area is the older of the two projects and it's been around since the crack of doom. Indicator Applet sprung up a few years ago to address some design concerns Canonical were having.

They work in fairly different ways so it's not a drop-in replacement and never really can be. For something to work on one or the other, it needs code to accomplish this.