I can't figure out the difference and can't find a clear anser on the internet. What's better or does it depend on the situation?

A quick Google search gives the answer regarding the difference: WDS & OLSR.

WDS is a system which allows multiple, pre-configured APs to operate as a single, wide-area wireless network. OLSR is a routing protocol optimized for usage in ad-hoc wireless networks which, by definition, lack pre-configured infrastructure.

They are apples and oranges; two completely different things, and not directly comparable.

What we can compare, is WDS and wireless ad-hoc networks. WDS is often used to provide and extend a wide-area wireless network in which the routing nodes (APs) are relatively stable and immobile. Wireless ad-hoc networks, on the other hand, are "wireless networks on the move". Each node in the ad-hoc network acts both as a client and as a router, and links are frequently broken and re-established all the time as nodes come and go.

So, to answer your question: which one you use depends on the situation.

WDS is a point to point connection between pre-determined nodes.  It is useful in smaller systems where the nodes are installed in fixed locations and an administrator will manually set up the link paths.  A common use case would be around a house or small business with one main router connected to the Internet operating as an AP(WDS) and one or more extension stations linked to the main router as STA(WDS) without wired connections.

Mesh networks like OLSR automatically set up link paths, thus being useful without the need for manual setup and also try to automatically adapt when a node is added, removed, or physically relocated so its paths to the other nodes change.