web.config:
Web.config file, as it sounds like is a configuration file for the Asp .net web application. An Asp .net application has one web.config file which keeps the configurations required for the corresponding application. Web.config file is written in XML with specific tags having specific meanings.
machine.config
As web.config file is used to configure one asp .net web application, same way Machine.config file is used to configure the application according to a particular machine. That is, configuration done in machine.config file is affected on any application that runs on a particular machine. Usually, this file is not altered and only web.config is used which configuring applications.