A tool performs a small, essential operation on GIS data. There are four types of tools, as shown in the table below. All tools, regardless of their type, work the same way; you can open their dialog box, you can use them in ModelBuilder, and you can call them from software programs.
Built-in tool. These tools are built using ArcObjects and a compiled programming language like .NET.
Model tool. These tools are created using ModelBuilder.
Script tool. These tools are created using the Script tool wizard and run a script file on disk, such as a Python file (.py), AML file (.aml), or executable (.exe or .bat).
Specialized tool. These tools are rare—they are built by system developers and have their own unique user interface for using the tool. The ArcGIS Data Interoperability extension contains specialized tools.
In addition to tool types, there are two categories of tools:
System tools are those tools built and delivered by Esri. They are installed by ArcGIS or any of its extension products. Almost all system tools are built-in tools, but you will also find system tools that are script or model tools. For example, the Spatial Statistics tools are all script tools, but since they are built and delivered by Esri, they are considered system tools.
Custom tools are built by you. These are most often script or model tools, but they can be built-in tools as well. There are an infinite number of custom tools.