Use & Derivative Immunity vs. Transactional Immunity

First the basics: a witness who is asked to provide information that could be incriminating can invoke the privilege granted by the 5th Amendment and refuse to answer. Here, the word "incriminating" is significant. That simply means that the answer(s) to the questions could be used to convict a witness of a crime either because the answer would provide direct evidence of that crime or because the answer(s) would provide information that might later lead to evidence of the crime.

A bit more to this puzzle, though: even if the witness invokes that Fifth Amendment protection against prosecution, a prosecutor might choose to override that protection by giving the witness immunity from prosecution in exchange for that testimony.  There are two types of immunity: use/derivative immunity and Transactional Immunity. 

Use & derivative immunity is the more common type of immunity granted. This type of immunity prevents prosecutors from using the witness's testimony as well as any evidence derived from that testimony. It essentially offers all the protection one would have received had that person invoked the 5th Amendment right not to testify.

This type of immunity, however, does not prevent prosecutors from gathering additional evidence (independent of the testimony) to later use against the witness. Practically, the witness should be cautious: although prosecutors will not be able to use the testimony of the witness against the witness, if the witness says something while testifying that then leads prosecutors to obtain evidence of a crime independent of the testimony, the witness might be subject to prosecution for that crime. 

Transactional immunity, on the other hand, provides broader protection for the witness.  So much so that this type of immunity is sometimes called "blanket" or "total" immunity. Specifically, transactional immunity offers complete protection from future prosecution for any matter mentioned in the immunized testimony. This means that even independent evidence that prosecutors might obtain can't be used to prosecute the witness if that independent evidence came about from the testimony itself. This is an important distinction between transactional immunity and use & derivative immunity.

But "total" immunity might be a misnomer. This type of immunity will not prevent prosecution for any criminal activity unrelated to anything discussed in the immunized testimony. Might also be noted, although I haven't seen this point tested, that transactional immunity is only available in state court. Use & derivative immunity is offered in both state and federal court.