Products represent the items you want to sell to your customers.
In Vendure, every Product has one or more ProductVariants. You can think of a Product as a "container" which houses the variants:
In the diagram above you'll notice that it is the ProductVariants which have an SKU (stock-keeping unit: a unique product code) and a price.
Products provide the overall name, description, slug, images. A product does not have a price, sku, or stock level.
ProductVariants have a price, sku, stock level, tax settings. They are the actual things that get added to orders and purchased.
Vendure can track the stock levels of each of your ProductVariants. This is done by setting the "track inventory" option to "track" (or "inherit from global settings" if the global setting is set to track).
When tracking inventory:
Back orders can be enabled by setting a negative value as the "Out-of-stock threshold". This can be done via global settings or on a per-variant basis.