Discrimination is the act of ignoring one’s individuality and grouping them into different categories while marginalizing individuals based on their group. While in reality, distinction should be done clearly, the problem that is being addressed these days are social discrimination, not distinction, which causes unequal treatment amongst people. Even within social discrimination though, there isno clear line on what is categorized as distinction and what is categorized as discrimination.

Furthermore, as equal opportunities for all has been emphasized in our current society, which increases our awareness of people and problems around us. Therefore, as our awareness increase, what we once did not consider as discrimination could be considered as discrimination now or in the future.
(From: https://mainichi.jp/articles/20150402/mul/00m/040/01900sc)

Discrimination and Distinction

Discrimination
Treating people differently based on a certain factor(s).

Distinction
Categorising people into certain groups based on factors (e.g. Asian People are categorized as Asian based on their ethnicity).

However, in cases where distinction based on factors which cause/leads to mistreatment/unfair treatment, it is considered as discrimination. Moreover, if the side that is being group feels mistreated/marginalized, it is also considered as discrimination.