Paprika is a spice made from dried, ground peppers. It’s mild-flavored and typically made from a combination of peppers that have less capsaicin, which is the compound that adds heat and pungency.
There are three types of paprika, each with distinct characteristics:
Sweet paprika: This is the common spice you find in the grocery store, often simply labeled "paprika." The variety has a mild, sweet pepper flavor (like red bell peppers without the pungency) and is a great addition to dishes that may otherwise be spicy, as it will help create balance.
Hot paprika: This is the high-quality Hungarian variety of paprika and is one of the primary flavor drivers of Hungarian cuisine. It’s an important ingredient in goulash, a beef and onion stew, and chicken paprika, which features a creamy paprika-based sauce. As you’d guess, hot paprika does add a spicy warmth. If you really want to get into it, there are actually eight grades of Hungarian paprika, ranging in levels of spiciness.
Smoked paprika: This variety, also called pimentón, is made from a combination of peppers that are dried and oak-smoked. It is a staple of Spanish cuisine — think smoky pulpo (octopus) and patatas bravas (spicy potatoes). Again, as the name suggests, smoked paprika does add a rich, smoky flavor that is frankly quite addictive, but it usually does not add any heat (you may be able to find hot smoked paprika which will add both heat and smoke).