What is difference between oxidized silver and sterling silver?

Well, oxidized silver is a misnomer. It sounds that you purposely oxidized silver to make oxidized silver. The truth is that pure silver or 99.9 percent pure silver is a very reactive metal. It reacts with atmospheric oxygen to form silver oxide which forms a black layer on pure silver. This gives the proof of its purity and the black color leads people to call it oxidized silver. Pure silver due to its reactivity is not suitable for cutlery or jewelry because it gets tarnished easily by exposure to air.
Sterling silver is an alloy of 92.5% silver and rest copper. This alloy does not get oxidized easily that is why it is used for jewelry and cutlery.
A piece of blackened or oxidized silver is true sterling silver, but it’s surface has been intentionally darkened through by introducing it to a chemical process. This patina, a surface color that occurs when the silver is introduced to sulfides, is a sped up version of the natural tarnishing process.
You can oxidize sterling. We used a sulfur product to get a nice black. Sterling is 92.5 percent silver and 7.5 percent copper usually. If you heat sterling too much, you can get fire scale.