Tissues can either regenerate or scar. Scars (also called cicatrices) are areas of fibrous tissue (fibrosis) that replace normal skin (or other tissue) after injury or disease. A scar results from the biologic process of wound repair in the skin and other tissues of the body. Thus, scarring is a natural part of the healing process. With the exception of very minor lesions, every wound (e.g. after accident, disease, or surgery) results in some degree of scarring.
An exception to this is animals with regeneration, which do not form scars and the tissue will grow back exactly as before.
Scar tissue is not identical to the tissue that it replaces and is usually of inferior functional quality.
http://en.wikipedia.org/wiki/Scar
In biology, an organism is said to regenerate a lost or damaged part if the part regrows so that the original function is restored. Regenerative capacity is inversely related to complexity: in general, the more complex an animal is the less regeneration it is capable of. Whereas newts, for example, can regenerate severed limbs, mammals cannot. Limb regeneration in newts occurs in two major steps, first de-differentiation of adult cells into a stem cell state similar to embryonic cells and second, development of these cells into new tissue more or less the same way it developed the first time.[1] Simpler animals like planarian have an enhanced capacity to regenerate because the adults retain clusters of stem cells within their bodies which migrate to the parts of the body that need healing then divide and differentiate to provide the required missing tissue.
http://en.wikipedia.org/wiki/Regeneration_(biology)