Contact - anyone that you come across in the due course or business.  These are person who can be business owners or are employees or contractors that work for a Customer or Vendor.  Adding all your personal contacts does not really quality as business contacts, they unnecessarily clog your records.  You should input those contacts that you come across as part of your business.

Lead - a contact that is that has shown interest in your Products and Services.  These contacts are asking for website, brochures, and marketing materials.

Prospect - a qualified lead is a Prospect.  This lead has asked for a Proposal/Quote/Estimate and you now have an opportunity to do business with this Prospect and turn them into a Customer

Customer - anyone who has purchased or purchasing Products or Services from your company.

Account -  a large customer has multiple locations/business units, an account is a way to categorize customers where Products and Services have been sold to multiple locations/business units.  The account level detail provides a unified view of all the business done for this large customer.