Basically, a contract role is more likely to be one where you're treated somewhat like an employee of the organization but on a more temporary basis. Whereas a permanent role is one that continues indefinitely. For clarification purposes, an independent contractor would be more like a freelancer, consultant, or self employed worker. Whereas a contract position is one where you're treated as a temporary employee.
Some contract jobs can turn into permanent positions whereas some have a clear and definitive end date. Some employers use contract positions to determine if a candidate fits the culture of the organization and would be a good long term investment. This makes it easier to terminate the employment when the contract ends, if the employee isn't a good fit. There's a great TechRepublic article called "The Difference Between Contracting and Consulting" that defines what a contractor is:
A contractor essentially acts as a temporary employee. The contractor works under the manager's supervision, probably with other employees, to help complete part of a larger project. He or she is told what to do, how to do it, and when it needs to be done.
It also further describes what that person typically does:
A contractor generally bills based on time spent performing services. Invoices detail the number of hours worked multiplied by the set fee per hour. Contractors generally work onsite under direct supervision. They often work through agencies and don't find their own work.
Basically, if you take this job, use the higher pay to build an sinking fund to help leverage against future unemployment. When and if the contract ends, use that money to cover your expenses as you look for a new gig. This is very similar to what a freelance consultant or small business does by reinvesting profits to get through dry spells. The slightly higher pay helps you get through those times when there's no work. If you were to compare two positions, with all things being equal, and one position was temporary and one was permanent, the pay may help you decide whether to take the permanent, less risky but less rewarding position or the temporary, higher paying yet more risky one.