Direct answer: Bone tar is a tarry liquid produced when animal bones are heated in low-oxygen conditions. It is a historical and industrial by-product rather than a normal craft tar.
The basic principle is the same as other destructive distillation processes: organic material decomposes under heat, producing gases, liquids, oils, and residues. In the case of bones, the feedstock is animal bone rather than wood, coal, or peat. The resulting tar can be chemically unpleasant and difficult to dispose of.
Bone tar belongs mostly in discussions of pyrolysis, bone charcoal, historical industrial processes, and waste treatment. It is not a material most readers will buy for woodworking, boat care, or heritage craft. That makes it useful as an explanatory article, because it shows the outer edge of what the word tar can mean.
The key difference is source. Pine tar comes from resinous wood. Coal tar comes from coal. Bone tar comes from animal material and is closer to a pyrolysis by-product than to a traditional preservative finish.
In short: Produced from animal bones under pyrolysis or destructive distillation conditions. Usually discussed as an industrial by-product. Not a normal material for public craft use. Shows how broad the word tar can be.