Intarsia is where separate pieces of yarn are used in an individual area of colour. I did this for my dodgy bunnies and carrots, ending up with many little bobbins of yarn hanging off the back of the work, lots of loose ends & much weaving in and swearing.
Fair Isle is often used to describe the method of patterning colours along a row by running colours across the back when not in use, however I believe it is more accurate to call this 'stranding' as Fair Isle is a name for a specific style of knitting which is done by stranding.
According to the Shetland Museum website "...real Fair Isle patterns are built up in horizontal bands, by knitting two coloured yarns in each row. The motifs are clearly defined by careful selection of colours."