This is a cutaway drawing of the proposed structure of Ganymede's interior. Click on image for full size version (92K GIF) Image from: NASA

Differentiation is a scientific term which really means "to separate". In their earliest history, elements which made the planets would part into separate regions, if the planet were warm enough. This is the akin to the process whereby an oil & vinegar salad dressing will part into regions made only of oil and only of vinegar.

Planetary elements which separate include iron, which is heavy and silicate rock, which is lighter. Iron falls to the center of a planet and forms a core, silicate material stays in the middle, ice stays near the top, as shown in this drawing of the moon Ganymede.

Earth/Mars are examples of contiguous planets which did/did not differentiate early in their histories. Ganymede/Callisto are examples of contiguous moons which did/did not differentiate early in their histories. The lack of differentiation may say something about how warm these planets were upon formation.