Later is an adverb. It's used to express time, either in the future or after the time you have mentioned.
For example: "I'll see you later on Second Life."
Latter is an adjectiv, which means near or towards the end of something
For example: "I got tired during the latter part of the walk."
!Latter can also be used to describe the second thing of two things mentioned.
For example: Later, at the end of his apprenticeship, he was offered the choice of going to Russia for further experience in the flax trade or of entering a university he decided on the latter course and entered the University of Edinburgh in 1882 to study for the B.Sc. Degree in Physical Science.