Polarization –

Consider an atom placed inside an electric field. The centre of the positive charge is displaced along the applied field direction while the centre of negative charge is displaced in opposite direction, thus a dipole is produced.

When a dielectric material is placed inside an electric field, such dipoles are created in all atoms inside. This process of producing electric dipoles which are oriented along the field direction is called as polarization in dielectrics.

Susceptibility –

A quantity characterizing the capability of dielectric to be polarized. Quantitatively dielectric susceptibility equals the proportionality co-efficient $\chi$.

Relation: $P=\chi E$

where $E$ is intensity of electric field. $P$ is polarization of dielectric.