Components are aggregations of elements which are turned into a reusable element on your canvas.
On the canvas, Components are visually identified with a green outline.
They are particularly useful for elements that you'll be using across multiple pages of your site, such as;
In Oct-2022 Webflow added the ability to override certain aspects of a component in a particular instance, which expands the use cases for components to include things with structural consistency but content distinctions.
Any time you have a specific arrangement of elements that you are using on more than one page, and which you want to maintain consistency between, you should probably use a Component.
Currently, Components cannot be CMS-bound, or used within a Collection List.