What is the difference between "He is Japanese" and " He is from Japan"
I guess he is Japanese means his race is japanese
and he is from Japan can be anyone who holds a japanese passport.

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Your assumption is basically correct. "He is from Japan" specifically is saying where is from. "He is Japanese" can refer to race/ethnicity or nationality depending on context.

Nationality and ethnic background are two different things obviously. I know many people in the US who could be described as both "Japanese" and "American," for example, but you couldn't say they are from Japan.