A taxonomy is a way to group items together, and “term” is the generic name for each group in a taxonomy. Another built-in taxonomy in WordPress is tags, and same as with categories, every grouping within the “Tags” taxonomy is a term. Custom taxonomies can be added to WordPress by themes and plugins. A recipe site could have a taxonomy called “Ingredients”, with terms like “Eggs”, “Chicken”, “Pasta”, and so on.
Term
A term is a grouping within a taxonomy. If you have a category called "Reviews", then "Reviews" is the term and "category" is the taxonomy.