I'm never sure what Google is doing with their products. They get abandoned, replaced or morphed into different versions with little warning.
There is a lot of overlap between Allo and Hangouts, but one major difference is that Allo is tied to your phone number and Hangouts is tied to your Google account. For me, this makes Hangouts more attractive since I use it on everything that I use Google on. You can use Allo on other devices, but you have to set it up again, as opposed to simply logging into your Google account.
Let's see....you can make voice and video calls in Hangouts, but you can't in Allo. You can send short voice messages in Allo but you can't in Hangouts. Allo also integrates Google Assistant, but I'm not sure what this brings other than predicting responses.
Personally, I'm fine with Hangouts. I'm stuck with it anyway since I'm on Project Fi, so that's lucky for me.