The nosotros form is used when you are talking about a group of people, and you are including yourself in that group.
(example: we are not Italian. nosotros no somos Italianos)
The vosotros form is also speaking to a group of people but it is different for a couple of reasons:
1. You are speaking to a group of people that you are not including yourself in .
2. it is informal form (as opposed to Ustedes)- it is used in situations in which all of the people you are addressing are ones that you would individually us the tú form.
[example: Our house is red, your house is green
Nuestra casa es roja; la vuestra es verde]
Nosotros = we
Vosotros = all of you
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