Its alright Seejay, we all start somewhere like me learning the ropes of graphic art. I'll admit I didn't know any of these terms till I learnt it in college so I'll try my best to explain in a way that can be easily understood. So here are some basic terms you may see when browsing for computers or laptops.
Processor: The Processor or more commonly known as the CPU (Central Processing Unit) is basically the brain of the computer. This particular chip basically handles all the calculations and processes to make your computer work or function. An example would be say you open the program: Photoshop. The CPU would have to process the information very quickly just to be able to execute and output the application on to the screen.
Memory: The memory or RAM (Random Access Memory) is basically a temporary storage chip that holds active processors. Since all your personal files, software, games etc are stored in the hard drive. The distance between the CPU and hard drive is far and would take some time for the information to be pass from one point to another (not sure how long it would actually take). The memory sits between the CPU and hard drive to not only reduce the amount of time it takes for a piece of information from HDD (Hard Disk Drive) to the CPU. A quick example is if you open the game Solitaire (Old card game), the application files is stored on the HDD but copies the bits of files to the RAM causing the application to run from the RAM. If it needs additional piece of information that it may lack e.g. card pictures or scores, it will refer back to the HDD for the files.
Hard Drive: Hard Drive or HDD (Hard Disk Drive) is basically the storage part of the whole computer. This not only holds your personal files or applications but also has your operating system. As long you have space in your HDD you're all good but when you're running low on space you will develop problems later on. For now just ensure you have some space enough for the system to work.
Your question about the i5 CPU, I had to research that and found some information but mainly its the features it provides.
Core i7: It has a Quad Core processor, that contains features such as Hyper-Threading, Enchanced Intel Speed Step and Turbo Boost. These features mainly improve the processor performance. This is on the high end.
Core i5: Dual Core processor, its in the middle range processor that some of the same features as the i7. This includes the integrated graphics processor located on the die. Its good but not great but will get the basic of work done such as executing videos, movies etc.
Core i3: Dual Core Processor, its on the lower end of the processor that has most of the features as the i5 except it does not support Turbo Boost.
I'm not 100% confident in my answer I just give so feel free to correct me or CnC me but hopefully that answers some of your question.