For Goodman, something is art when it functions as art, and something functions as art when its exhibits an unspecified number of symptoms of the aesthetic (although the most important of these is exemplification.) Thus objects, such as paintings, can move several times in their lifetime in an out of arthood. It follows from this that they can also move in and out of the everyday. Goodman of course did not realize, or at least, did not mention this.
Unfortunately, when they are out of arthood they are also out of the realm of the aesthetic since Goodman doesn’t really take into account non-art aesthetics.
Take for example a rock picked up in a driveway (Goodman's example). Goodman believes that when the rock is in the driveway it has no aesthetic properties (this of course cannot be accepted by everyday aesthetics) but that when it is put on a pedestal in an art gallery it comes to exemplify certain properties (and so, is symbolic even if it does not represent or express). In doing this it comes to function as art.
So whereas Goodman can be seen as expanding the formalist conception of art (initiated by Kant and expanded by Bell to include relations of lines and colors) to include new material (for example texture and the type of material used), Danto can be seen as rejecting it. Whereas Goodman thinks art calls on us to attend quite carefully to its many exhibited referential features, Danto thinks that we need to attend to things that are not exhibited (at least directly in the work) for example art history, art theory, the intended meaning of the artist, the title, and physical artworld placement (i.e. in a gallery or museum). As I have suggested, I think both are right about this.
Both Goodman and Danto might well admire an all-red painting, but for Goodman the key is in how the artist has drawn our attention to the particular quality of redness and to all sorts of other exhibited features. Goodman does allow, however, some external reference through his notion of metaphorical exemplification as well as through the fact that the property of redness is shared by all of the other red things in the world. Danto focuses instead on the way in which we see the painting based on our knowledge of art history, the intentions of the painter, the title and so forth.
For Goodman it is what you see that gives you at least indirect reference, i.e. exemplification. (Denotative reference plays only a small role in Goodman’s theory of art.) For Goodman, even work that is entirely abstract can exemplify its properties, properties which are shared by objects outside the artwork. Thus the entire distinction between properties that are intrinsic and ones that are extrinsic seems to dissolve (not entirely though). Goodman's approach explains why, after seeing a show by a good artist, we tend to see things in the world in terms of the works. He in a sense captures the dynamic interaction of art and world in a way that Danto does not. But then Danto provides captures something about that in a way Goodman does not. In short, for Danto artworld knowledge can enter into that which is expressed or even exemplified by a work of art.
Another important difference between the two concerns what happens when the artwork leaves the art gallery. For Danto it is still art if it is purchased, taken home and perceived by someone with suitable art historical knowledge. What is not clear is what happens if the Warhol Brillo Box is taken to a warehouse where it is indistinguishable from the Brillo boxes there: is it still art? (Danto at one point imagines the Brillo Box just is an appropriated Brillo box from the factory. That version of Brillo Box, not Warhol's version, would then be totally indistinguishable from the other Brillo boxes, assuming that its history of origin is forgotten, or someone switches it with a real Brillo box by accident.)
Danto sometimes talks like Dickie: once art, always art, and therefore Brillo Box is still art out of the gallery, as though once it has been displayed as art in the art gallery it cannot stop being so...even if it is impossible to locate it amongst its indiscernible counterparts in the warehouse. (But at other times he takes the opposite position holding the Brillo Box is reduced to its real counterpart once it is taken out of the gallery. Danto: you can't have it both ways!)
Goodman however says that once it ceases to function as art it is no art. Well he hedges on that a bit (more than a bit): he says a Rembrandt may still be a Rembrandt after it has been taken out of the museum and used as a blanket. Yet under these post-apocalyptic conditions it would no longer be functioning as art, and so it would not be art, unless you could say it had the potential to once again be art...which, as we saw, would go against Goodman's spare metaphysics.)
But the question of when it is art is really more important, for him, than "what is art." It is art when it functions as art, which does not happen when it functions as a blanket. So one of Warhol's Brillo Boxes taken to the warehouse no longer functions as art and hence is no longer art for Goodman, which seems right to me, until I think of the curator who has been desperately looking for his stolen art, and at last finds it hidden in plain sight in the warehouse. She is not going to say, "well it is no longer a work of art." So that is a problem for both Danto and Goodman.
So, what is the value of this debate to everyday aesthetics? It is not explicit but rather lies in the gradual evaporation of the distinction between that which is intrinsic and that which is extrinsic in formalist art (especially for Goodman), combined with his view that art is essentially cognitive. Because art's significance goes beyond representation and expression to also include exemplification, including both literal and metaphorical exemplification, and both of sensually evident and experientially somewhat hidden cultural properties, this draws our attention to aesthetic qualities of everyday life.
Bear in mind that, strictly speaking, Goodman has to be against the aesthetics of everyday life: he seems to make no distinction between art and aesthetic, and he seems to reduce the aesthetic to the artistic, so that the aesthetic is only within the realm of art. But again, as anything can move in or out of the realm of art, depending on how it functions, one could imagine an in between realm, the realm of everyday aesthetics where some, but not the sufficient number or intensity of symptoms of “the aesthetic” (which is to say, of arthood) are present.
A big difference between Goodman and Danto here is that Danto lays a lot of emphasis on imaginative seeing and Goodman seems to lay none at all. The “is” of artistic representation, since it can also be applied to what the child does in pretending that a stick is a horse, plays no role in Goodman, except perhaps in the domain of metaphorical exemplification. Once the “is” is let in, and metaphorical exemplification emphasized we can see that the artist, in looking imaginatively at both her subject matter and her materials is, through the process of creative work, able ultimately to make something that, in Danto’s words, embodies meaning.
But this, of course, requires seeing the relationship between everyday aesthetics and art aesthetics as being dynamic and interactional. It would reject those views of everyday aesthetics which see the everyday as totally detached from art every bit as much as it would reject those who, like Danto in some moods, see art totally detached from the everyday. For Danto, if Rauschenberg’s Bed is stripped of its paint it becomes a mere bed again, and if Warhol’s Brillo Box is taken out of the gallery and, even more generally, out of the artworld context, it too loses all of its art-relevant properties, which are the only aesthetic properties of much interest to Danto. My view, perhaps closer to Goodman on this point, is that the materials taken up by artists in the creative process contain aesthetic properties already, and that these are transformed in the creative process. Dewey says that art refines and intensifies everyday experience. This is how that is done: the artist in the creative process refines and intensifies art-like aesthetic properties already there in the non-art world, both the ones favored by Danto and the ones favored by Goodman.