We are classifying matter as elements, compounds, mixtures, and solutions.
Elements are the purest and simplest forms of chemical matter at the atomic level. Each element is composed of the same atoms containing the same number of protons in their nuclei (called the atomic number). All of the chemical elements are categorized and cataloged on the periodic table.
Compounds are chemical matter that contain multiple elements bonded together to make unique substances that display their own reactivity and physical properties. These bonds between the elements involve the electrons and can be either ionic or covalent in nature.
Mixtures are combinations of two or more chemical compounds that although combined together but not altered chemically (in other words, covalent bonds are not broken). Mixtures can be classified as either heterogeneous (multiple phases are present) or homogeneous (a single phase is present).
A solution is an example of a homogeneous mixture. This is when one compound is dissolved in some type of liquid solvent. A common example is dissolving salt (NaCl) in water. After dissolving to form a solution, a single visible phase is present.
All of these classifications of matter are important because they help us to understand how different forms of chemical matter relate to one another.
An Element is a very pure form of matter, which is classified based on quite a few characteristics seen on the periodic table, etc. Such characteristics include boiling point, molar mass, number of protons, etc...
A compound a form of matter consisting of two or more elements. There are many types of compounds, but they are very common... An example of a compound would be eater (better known as H2O in the world of chemistry) and it is a combination of the two elements, hydrogen and oxygen.
Mixtures are what you get when mixing any two objects together.. This can range from anything like nails and sand grains, to water and oil. It's a very general group,and consists of other groups: homogeneous and heterogeneous.
Solutions are the result of a soluble substance being dissolved in a solvent. This can als be homogeneous or heterogeneous. An example of a solution is a saline solution, which is pretty much salt dissolved in water.
Classifying matter is extremely important as it allows us to differentiate between different substances and study them separately. Classification becomes more clear as one progresses through chemistry; the nature of the substance or matter determines many, many things. :)