What is an Online -UPS and OFF Line UPS system. what is the primary difference and its working.... Can anyone describe...?

Rejith,on line UPS is the type of UPS where your mains passes through the UPS to your load on a permanent basis while in offline,the UPS is on standby and only comes in when mains fail.The timing should be very negligible. In order words, in online:
Mains-UPS-Load
Offline:Mains in parallel with UPS all connected to the load with a fast acting transfer switch. They are all for back up supply for load(critical load) during power failure or unstable power condition pending when mains or standby comes. Choice of type depends on your critical load.For critical loads where failure consequences is high,on line is recommended but for loads where momentary failure is not and issue, then standby is good. This is just the basis. There are different types,Electromechanical ups and static ups. Each one has its own advantages and application.

Normally Offline UPS will have AVR at the reserve bypass and not for Online UPS

Christian - I think the simplest explanation is that an on-line UPS system is voltage and frequency independent of the source while an off-line UPS is frequency dependent on the source.