A hierarchical system is used, as the family decribes to Revit how to make something. The type of the Family permits certain parameters to be applied and the element (or instance) is the actual part of the building model. For example, an elevator may be the name of a Revit Family. There may be types that describe the different sizes, materials, parameter variables, etc. The actual building model will have instances of those types placed in the building. Any change to a type is updated in every instance throughout the project. For example, when you change the elevator shaft width of one of your elevator types, all the elevators with the same elevator type are updated instantly.