In most CRM systems, the term lead designates an individual who might become your customer, but currently isn't. Another word for a lead is a prospect. Leads are usually converted to contacts, companies and deals (opportunities) or are 'junked'.
When the leads are entered in your CRM, they need to be scored or qualified. This process entails gathering information about the prospect, such as level of interest, budget, or company size. A lead that showed interest in your product, like requesting a quote or attending a webinar, is considered 'warm'. A lead that showed interest in purchasing your product, like requesting an invoice or asking for a price list, is called 'hot'. Leads who aren't qualified to purchase your product are called 'junk leads'.