This is difficult to answer. They are generally stronger in some or all of the following areas:
- Recognition of positional features
However, they may be weaker in some of those areas than a 1600. My point is that there is no well-defined set of knowledge that makes someone a 1700-level player. They have just enough of a hodge-podge of experience and maybe some studying that they can stumble into wins against those with less experience. In fact, when you get to 1700 from 1600, you probably won't feel a tangible difference in the way you think about the game or make moves. Your results will simply be just a little better.
As for how to win against them: play better chess than they do. Study the things that I mentioned above (although I would avoid openings). One piece of advice that I've heard before for generating upsets is to make the game as complicated as possible, to maximize the likelihood that your opponent misses something major.