A domain is the name of your website that people type into the browser to find you — for example, raf.am. Its whole job is to be easy to remember.
Behind the scenes, every website actually lives at a long string of numbers (an address that computers understand), and the domain is a friendly nickname that hides those numbers — much like a saved contact name in your phone hides the actual phone number. You register a domain for a period of time (usually a year at a time) and renew it to keep it yours.
A domain on its own is only the name; for a working website you also need a place where the site is stored, and that place is called Hosting. The domain “points” visitors to that hosting, the same way a signpost shows the way to the building where a shop is located.