In Joomla! an Article is a piece of content consisting of text (HTML), possibly with links to other resources (for example, images). Articles are the basic units of information in the content system and the bottom level in the content hierarchy. Since Joomla! 2.5 , each Article is in exactly one Category. A Category can be in another Category making it a sub Category. It is also possible to have Uncategorised Articles. These articles exist without being associated with any Category.

Before Joomla! 2.5 and earlier versions, an Article was the third level in the hierarchy Sections ? Categories ? Articles. Now an Article is a bottom level and will alway be the second level or greater in hierarchy.

Category ? Articles
Category ? sub Category ? Articles
Category ? sub Category ? sub Category ? Articles

Articles are maintained using the Article Manager (see the Content Article Manager for or the Content Article Manager for ) which can be reached in the Administrator (Back-end) by clicking on the Content menu, then the Article Manager menu item.

Reference: http://docs.joomla.org/Glossary

A component is a kind of Joomla! extension. Components are the main functional units of Joomla!; they can be seen as mini-applications. An easy analogy would be that Joomla! is the operating system and the components are desktop applications. They are usually displayed in the center of the main content area of a template (depending on the template).

Most components have two main parts: an administrator part and a site part. The site part is what is used to render pages when being called during normal site operation. The administrator part provides an interface to configure and manage different aspects of the component and is accessible through the Joomla! administrator application.

Joomla! comes with a number of core components, like the content management system, contact forms and Web Links.

Reference: http://docs.joomla.org/Glossary