Domains explained and common questions answered.
Imagine if I gave you instructions to go to a certain address: 1600 Pennsylvania Ave NW, Washington, DC 20500. For most of us, this address is an unfamiliar one and without GPS it would be be a pain to find out where it is. Instead, how much easier would it be if I gave you its more commonly known name "The White House"? Suddenly, everyone knows exactly where it is.
A domain name is like a nickname or a label for an address, specifically an IP address. The problem with IP addresses is they are ugly and difficult to tell apart which is where domain names come in. It's much easier to remember google.com instead of 220.127.116.11 (putting this in your browser will take you to google.com).
Technically speaking, no difference really. Websites with .com are most common, and therefore are most wanted. You can't own a .gov website though, unless you're part of the government. There are many other options, such as .pizza.
Generally, however much someone is willing to pay for it. A domain name like ilovecats.pizza is probably worth a dollar a year. A regular domain name like mycompanywebsite.com is generally ten dollars or more a year and a famous domain name like amazon.com is probably worth millions.
Because of domain squatting. It's the practice of people purchasing and registering commonly used domains and sitting on them for years in hopes that someone will come along and pay up to thousands of dollars for it.