Everything in the universe is made up of essentially 2 things: matter and energy. Matter describes the physical things around us: the earth, the air you breathe, your pencil. Matter is made up of particles called atoms and molecules. Atoms are particles of elements - substances that cannot be broken down further. There are currently 109 known elements, but obviously there are more than 109 different substances in the universe. This is because atoms of elements can combine with one another to form compounds. Molecules are single units of compounds. For example, a glass of water contains many molecules of the compound water. Each molecule of water consists of 2 hydrogen atoms chemically combined with 1 oxygen atom as you can see in the following diagram (hydrogen atoms are represented by white spheres and oxygen by red).
There are 4 fundamental states of matter: solid, liquid, gas and plasma. We will concern ourselves only with the first three since the plasma state does not occur commonly in nature. Continuing with our example, the solid water (or ice) is shown at left. In solids, molecules are tightly packed together. As you can see in the representation, the molecules of a solid do move, however their movement is very limited. As you add energy to ice in the form of heat, you increase the amount of movement by each molecule. The molecules slowly separate from each other and form a liquid state.
Unlike the solid state where the individual molecules are relatively fixed in place, molecules can easily move past one another in the liquid state as can be seen in the diagram at right. As you add even more heat to the sample, the molecules separate further until the point at which there is relatively little interaction between them. At this point, the individual molecules move very quickly. This is called the gas state. In water, the gas state is achieved by boiling water to form steam.