Model variable
When data or values are added to a model they become variables. When tools are added to a model, only the output variable is created automatically in the model. To show other tool parameters as variables in the model, either create stand alone variables and connect them to a tool, or expose tool parameters as variables.
Tool Element
Tools are the basic building blocks of workflows in a model. Tools perform various operations on geographic or tabular data. When tools are added to a model they become model elements.
Tool Dialog
The tool dialog is the interface where a tool's parameters can be specified.
Tool parameters
Tool parameters are inputs and outputs of a tool, as well as specifications that impact tool processing. Each parameter has a user interface control where a value or path is entered. Some parameters are required and others may be optional. 
Model tool dialog box
The model tool dialog box is the interface where a model tool's parameters can be specified. A model's tool dialog box can be opened by right-clicking the model and selecting Open or by simply double-clicking the model. When a model is built within ModelBuilder, variables can be made into model parameters that are exposed on the model tool dialog box.
Model parameter
Model parameters are the parameters that appear on the model tool dialog box. Any variable in the model can be made a model parameter. 
Model variable data type
Model variable data type refers to what kind of data a model variable is. Common data types include feature class, feature layer, workspace, Boolean, and double. The data type of a model variable can be changed at any time.
Model parameter order
The order of the parameters on the model tool dialog box is determined by the order in which the model parameters are set from Model Properties.
Model parameter type
Model parameter type refers to whether the model parameter is required or optional. Optional parameters have (optional) appended to their labels on the dialog box.
Model parameter filter
Parameter filters are used to limit or restrict the input values or data that can be specified for a model tool parameter. For example, a Value List filter can be used so that only values from a list can be specified for the parameter.
There are six types of parameter filters that can be applied to model parameters:
Model output symbology
Model output symbology refers to the symbology of an output dataset when the variable is added to the ArcMap table of contents. The symbology of model output can be controlled by specifying a layer file that defines the desired symbology in variable properties.
Running a model tool
A model can be run from its tool dialog box by double-clicking the model in the Catalog window or ArcToolbox window.