Lead Generation is the process of attracting potential customers and collecting enough information to begin a sales or nurture process.
It matters because strategy keeps channels from competing with each other. When this concept is clearly defined, the team can connect budget, audience, creative, offer, tracking, and reporting to revenue instead of chasing disconnected metrics.
Example
A visitor requests a demonstration and supplies contact information plus the problem they want to solve. That creates a lead to evaluate and follow up; it does not yet establish a new paying customer.