"Tactless. Adj. Lacking or showing a lack of what is fitting and considerate in dealing with others; revealing lack of perceptiveness or judgment or finesse."
"Frank. Adj. Honest and straightforward in speech or attitude; outspoken or blunt; open and avowed; undisguised."
The way I see it is like this: a frank individual, such as myself, will freely say, "That dress looks awful on you", before the person buys it. A tactless person will go up to someone at a party and say, "Wow! That dress looks awful on you!", not caring how many people overhear.
The difference? I am honest and as they say, the truth hurts. However, I know when it is appropriate to display such honesty and when it isn't. When circumstances arise in which it would be wholly inappropriate to offer unbridled criticism, I tame myself. I realize that in such cases it would be far meaner to be honest than to lie. On the other hand, a tactless person is incapable of making such a distinction. They are unable to judge a situation and determine whether it is best to remain silent or to offer their opinion and because of that, they are seen as offensive and rude. In short, a tactless person is blunt with no regard to appropriateness.
SCENARIO: Your friend is in a crowded dressing room at a department store trying on an outfit for an upcoming date. She comes out of the dressing room in a dress that highlights her backfat, rolls and love handles and the color of the dress makes her look sallow and sickly.
FRANK: That dress isn't very flattering. Try the other one.
TACTLESS: That dress makes you look fat as hell and the color makes you look like you are about to die of dysentery. Take that ugly sh*t off before someone else sees you!
I have met a lot of people who are tactless but think that they are frank or "honest/blunt" as they put it. I think it's always good to be honest but that doesn't mean you should forget basic consideration and empathy for others either.