Wallets are an important factor to understand when dealing with cryptocurrencies. Essentially, they are where you store your digital capital. The equivalent in standard currencies would be your bank account.
There are three types of wallets: Software, Hardware and paper.
Software wallets are basically a program on your computer that stores your digital currencies. Your wallet is associated with a private key and that is what gives you ownership over your funds. It is similar to your PIN number. The important downside to be aware of is that you can lose your currency if your computer is hacked or if it crashes and your keys are not backed up.
Hardware wallets are a more secure though slightly more complicated second layer of storing your capital. With hardware wallets you can access your coins from any device by plugging it in much like a USB device, and it is virtually impossible to access or obtain your private key.
paper wallets are an offline cold storage method of saving cryptocurrencies. It basically includes printing out your private and public keys on a paper. Then, you store and save in a secure location.