In easy English, a domain name is an address to a website. As in real life every address has to be unique. Originally domain names did not exist, instead one had to type in a long string of numbers which is known as an IP Address. Domain names are a more user friendly way of accessing a website as humans read words rather than long strings of numbers.
As you already know, your house address is made up of various components such as house name, street address and the name of the city you're living in. Similar to your home address even domain names are made up of various components. I'm going to take as an example a domain name that I'm sure you've heard about before which is "http://www.google.com" The domain name I'm using in this example is made up of three components which are .com, Google and www. The last part of the domain name which is .com is known as the top-level domain.
Every domain must end with a top-level domain (TLDs). In the early days there were only a handful of TLDs such as .com, .net and .org. Nowadays there is a wide range of TLDs as every country has his own TLD. In addition to that it will soon be possible for anyone to purchase his own TLD although it will be very expensive.
The second component of the domain is Google which is the second-level domain. As with the top-level domain, the second-level domain is also chosen by the buyer. Any combination of strings may be chosen as long as it's made up of characters, numbers and dashes. Another requirement is that the combination of the top-level domain and second-level domain is unique. For example, in this case no one can purchase "http://www.google.com" as it has already been registered by Google.
The last component of the domain is www which is the third-level domain, more commonly known as subdomain. Subdomains are domains that form part of larger domains. The owner of a domain can create any subdomain he wishes as long as it's made up of characters and numbers.
That's all about the various components of a domain. To purchase a domain one may visit one of the many registrars that are available. Nowadays prices for domains are very low with a 1yr registration for a.com being $10 to $15.
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