A word is a sound or a collection of sounds that has a meaning or function and can be used alone. Words often have meanings. They meet an outside being, an object, a movement. When we read or hear the word, we visualize that being or movement: book, sheep, tree, pencil.
Vocabulary, knowledge of words, is of great importance for a person to be able to express herself correctly. The fact that you are not using the right words while telling something to the people around you means that you cannot convey what you want to the other person. The only way to fully explain an event, a piece of theoretical information, a word, or a thought to the other party is to have a large vocabulary.