Accounts are created for the customers you're doing work for. Contacts are individuals you may contact when performing a service for a particular account.
An account can have multiple contacts associated with it, and a contact can be associated with one or many different accounts.
Accounts and contacts have a parent-child relationship.
Example 1
You may be working with ABC theaters and installing speakers at two of their locations. The account would be "ABC Theaters," and the contacts assigned to that account could be managers from each location you may need to contact while performing the work.
Example 2
You may have a couple of accounts for whom you perform similar tasks and services, and use the same builder. For example, you may have an account with Acme, Zoogle, and NCG.
Since you use the same builder, you can add the builder as the contact to all three accounts and have this person's information populate in the opportunities and projects on Cloud.