We are trying to understand why "Leads" is called "Leads" and this is separate to Contacts and Companies?

We are used to inputting new contacts straight into the CRM system as a company but Zoho has a module called Leads and this seems to track/qualify the quality of the "introduction".

We know the term "Lead" to be a warm introduction that could end up being a sale and this could just as easily be tracked if inputted straight into Companies or Contacts.

Could someone let me know the main purpose of tracking Leads separately to the rest of the CRM system?

Many thanks!
Gavin