Store credit
Adds a balance to the Microsoft account behind the Xbox profile. It buys games, add-ons and in-game currency from the store, and because the account is shared across Xbox and Windows, the same balance is usually spendable on both.
That cross-device behaviour is genuinely useful and is worth mentioning to the recipient — people assume the balance is console-only and leave it unspent.
Subscription codes
A separate product: a code worth a set number of months of membership, redeemed directly against the subscription. These are the right choice when the gift is specifically "more months of the service", because they extend an existing membership cleanly.
Store credit can often pay for membership too, but the prepaid code is the less ambiguous route.
Decide which one you want before asking. They are different products with different prices.
Region
Same rule as the rest of the category: the code belongs to one country's store and is checked at redemption. Confirm the country the account is registered in.
What it will not do
- Buy hardware, in most regions.
- Pay for anything billed outside the Microsoft store.
- Transfer between accounts once redeemed.
Asking for one
Say which of the two you want, the country, and the amount or the number of months. The gaming category guide covers the store-credit-versus-subscription question across platforms.