Explanation/Reference:
Note: A lead entity represents an individual that is identified as someone who is interested in receiving specific information about the products or services offered by the company. The information is provided to a lead by a salesperson through email or other communication activities available in Microsoft Dynamics CRM. A lead is used to track contacts or accounts that are potential customers, but who have not yet been qualified.
Lead management is largely the same as opportunity management. However, a lead is kept separate from customer and opportunity data until the lead is qualified. The possible states for a lead are Open, Qualified, and Disqualified. A qualified lead may be converted to an account, contact or opportunity.
References: https://msdn.microsoft.com/en-us/library/gg328442.aspx