what's the difference between 1....d6 and 1....g6?

Not much if you intend to play the modern, but if you intend to play the pirc, 1... d6 is best

Both moves are played in King's Indian Defense (Usually ...Nf6 first, followed by ...g6 and eventually ...d6).

Two different moves with two different ideas.  Depends what white plays too.

Life and death.

I'm guessing this is against 1.e4? Well they do provide different options. For instance, after 1...g6 you have the option of playing c6 and d5. After 1...d6 you can reach the Hanham Variation of the Philidor Defense discussed here.
http://dev.jeremysilman.com/shop/pc/Philidor-Files-The-p3838.htm

1...d6 also means you can play 2...Nf6 while making 3.e5 less good for white. Then if white defends the e pawn with 3.Nc3, the c pawn is blocked.

There are major differences:

1) After 1...d6, you have the Pirc (1.e4 d6 2.d4 Nf6) and the No Name Defense (1.d4 d6 2.c4 e5).  Playing 1...g6 allows White to avoid the Pirc, and makes the No-Name Defense impossible.

2) After 1...g6, there is the possibility of the Sniper (1...g6, 2...Bg7, and 3...c5 - instead of 3...d6) or the Guerindenzie (Spelling?), which is 3...c6 and 4...d5, occupying the light squares.  The Sniper can of course transpose to the Dzindzi Indian Defense or the Accelerated Dragon as well.  Playing 1...d6 makes these moves impossible.

3) Playing the Modern Defense, Black can start with either move.  There may be annoyances in side lines that make one move preferable over the other on a player to player basis.

When you play first 1...d6, you can play also ...g6, but if you want you can play also other pawn moves as ...e6 instead of ...g6. When you play first 1... g6 you are committed to make fianketo.