It is a common thing that people are always mixing the web hosting with a domain name. There is a big difference between these two. A domain name is more like an address that leads to your website. On the other hand, web hosting is the place where your website is stored. So in a way, your domain name leads to your web hosting server. It is an address where your website resides.
You will need a name, to begin with. Think of something catchy and unique. Most of the time, it will happen that a name that you chose will be taken so it is better to come up with a few variations. Then, you will need to pay a visit to one of the domain registrars. After you check that your name is not taken, you are free to order it and pay a registration fee. The most important step is to pair in your web host and your domain name. This is done by changing the DNS record. When all is set, you are free to start using your domain.
It means that you now own a small piece of the Internet space. It is like buying a real estate. It is totally the same. It is really important to have some information from your web host because you will need it to fill in MX record information and DNS record. These records are in charge of your content which gets displayed when someone navigates your domain. They also control your email address, sending and receiving, as well as your hosting package that is associated with your domain. If the information is not accurate, the content will not be displayed and the page will not load up.
Now, every domain has an extension. It is usually .com or .net. These extensions are referred to as top level domains. These top level domains are mostly opened for public registration but there are some very strict rules. If you want to register a country code top level domain, you can not come from the corresponding country.
A great thing about TLDs are the characteristics that you can read from them. If a domain ends with .biz, it usually means that domain serves for various types of businesses, just like .edu stands for education. These extensions make running these domains much easier and they simplify things a bit in order for everyone to better understand it.