Fundamentally, a WordPress Theme is a way to “skin” your website. This means the design and presentation of the site is managed by the Theme.
Think of it this way, WordPress is the skeleton, and a theme is the skin.
A WordPress theme is a set of files that determine the look and feel of your WordPress-powered website. Themes include information about the general layout of the site, and other content such as graphics, headers, logos and footers.
By default, WordPress comes with a default Theme, the latest being the WordPress TwentyFourteen theme. This means that when you install WordPress on your site, it’s ready to host and manage your content right away.
The frontend of your WordPress site, when first installed, is basic, simple, and rather boring. That’s because the theme that comes pre-installed with WordPress is very basic, simple, and boring.
Plugins can extend WordPress to do almost anything you can imagine.
By default, WordPress comes with a standard functionality. Some might say it’s pretty powerful by it’s own, however WordPress can’t do everything.
This is where WordPress plugins come into play. Plugins are tools to extend the functionality of WordPress. Things like e-commerce carts, SEO functionality for your site, contact forms to gather leads and feedback, twitter widgets to display your latest tweets, caching plugins to speed up your site and many, many more are available some for free and some for money.