Reviewing an exhibit at the NYU Catholic Center, Maureen Mullarkey explains the distinction and why it matters:
With few exceptions, the show confirmed my growing assent to the Orthodox distinction between sacred art and mere secular art with religious subject matter. It illustrated, too, the distance between piety and genius. . . .
However fine, [a featured] drawing remains a copy of part of a painting from the Dutch Golden Age. It is a beautiful rendition of its model, but what distinguishes it as sacred art? Neither subject matter nor an artist’s piety qualifies art as sacred. Technique and touch applied to the rendering of a religious theme do not differ from what would be used to depict any moodily lit, anatomically correct figure in space. . . .
Guiding the selections for [the exhibit] is the assumption that faith is primary in matters of artistic achievement in sacred art. Were that true, this would have been more than the unexceptional exhibit that it is. . . . In commenting on the great periods of religious art in the past, Mark Chagall remarked, “There were good and bad artists even then. The difference did not lie in their piety but in their painterly ability.”
Read more on First Things: http://www.firstthings.com/blogs/mullarkey/2015/06/sacred-art-vs-sacred-subject