With WordPress, you have pages that display the content you put on those pages. To style the content on these pages, we use different files in a WordPress theme. But which files are assigned to which pages? That’s where the Template Hierarchy comes in. Depending on what templates are available in the theme, different files will be assigned to certain pages.

“WordPress looks for template files with specific names in the current Theme’s directory and uses the first matching template file listed under the appropriate query section below.” - WordPress Codex

There’s no better way to understand the WordPress Template Hierarchy than to see it visually.

Source: WordPress Template Hierarchy Diagram