An expansion is a significant addition to gameplay. It requires major additions to the game's programming. It's developed after the release of the game, and the game should be able to stand on its own without it. So when you buy a game, you pay for the work done on that game. When you then buy an expansion, you pay for the additional work that's gone into the expansion.
A good recent example would be Don't Starve's Reign of the Giants, which is a $5 expansion to a $15 game. Or a classic example would be Starcraft's Brood War expansion.
DLC on the other hand is content - stuff for the game that doesn't require changes to the game's code. Hats and guns and horse armour. It may have been created alongside the game as it was being developed. This... can be done well, but right now it's often a way to try and extract more money from players for minimum effort.
I don't want to make DLC for Airships. Any references to hat purchases, custom shoulder-parrots and 25 new variants of gold leaf are jokes. I may end up making expansions - in particular, I like the idea of adding horrible magic to the game, so you can sacrifice your crew on the dark altar to make their ghosts eat the enemy's minds and stuff like that.
Two things will influence whether there's going to be expansions. The first one is how successful the game is. An expansion by definition can't outsell the game it's based on, so it's only worth it if the player base is big enough. The second one is simply whether I want to. I might want to start work on a new major game immediately, or spend some time creating prototypes or annoying art games. Or maybe I'll want to get started right away on adding all the cool stuff that didn't make the cut.
Finally, speaking of the cut - why don't I just put all of those cool ideas into the (base) game? Because they are accumulating faster than I can put them in. I know from experience that you have to commit to a fixed set of features for a game, or it will stay forever unfinished, unpolished, buggy. So I have to temper my own enthusiasm for cool new ideas. I don't want to say no, but I don't want to commit to adding more stuff into the game until it collapses - hence the "sounds like a good idea for an expansion" line.