The theme used for your Drupal site is the design and layout that is applied to the functional site you have built so far.
In other systems you may have used, this could have been described as a "skin" or "design layer". Some might also refer to this as the "look and feel" of the site.
It is possible for you to use one theme for the users of the site and another for the editors, and this is often the case in practice.
There are many themes available for Drupal, and these can make exactly the same Drupal site look very different with the quick change of a setting.