The process for making the two is slightly different. For pancetta, the focus is really on how it's cured. This can be done simply with salt, but spices and other aromatics are often added to infuse the pancetta with particular flavors.
Bacon takes things one step further by smoking the meat after it's been cured. This is usually a cold-smoking process, meaning that the bacon isn't actually heated or cooked during smoking and remains raw. Smoking can be done with a wide range of woods, from apple to maple, which each give their own distinctive, delicious flavors to the meat.
So pancetta is cured and unsmoked, while bacon is cured and smoked, but both need to be cooked before being eaten. They can be used interchangeably in dishes, depending on whether or not you want a smoky flavor. Make sense?
Prosciutto (top left) is very different from either bacon or pancetta, but we think it gets confusing because the words prosciutto and pancetta can sound similar to our non-Italian ears! Prosciutto is made from the hind leg of a pig (ie, the ham), and outside Italy, calling it prosciutto indicates a ham that has been cured.
The quality of prosciutto is is entirely in how it's cured. The outside of the ham is usually rubbed with just salt and sometimes a mix of spices. This draws out moisture and concentrates the flavor while the ham slowly air-dries (very much like dry-aged beef). This process can take anywhere from a few months to a several years depending on the desired result.
Once cured, prosciutto is usually thinly sliced and eaten as is. In other words, uncooked - though we wouldn't exactly call the meat raw after it's been cured for so long. Sometimes prosciutto gets lightly cooked as a finishing touch to a pasta sauce or other dish, but this is more to bring out the aroma and merge flavors than it is to cook the prosciutto.
So now we have to ask - between the three, do you have a favorite?