Modules: You can think of modules as plug-ins that extend Drupal core.
There are two main types of modules:
Core modules are included in the default Drupal install and are located in the main "modules" directory in the root directory of the Drupal install. These are do-not-touch-the-code modules, but settings for core modules can be changed in the Drupal admin interface.
Contributed modules extend the features not currently in Drupal core or core modules. These are modules that have been created by users in the Drupal community who have made their code available for use via the Projects section on Drupal.org, like Tom's Content Analysis module. These modules are placed within the "sites" directory instead of the main modules directory.