“Product” is what you call it in-house, “Vendor Item” is what your vendor calls it.
You can have multiple vendor items linked to a product, which is useful when you buy your product from more than one vendor.
Please note, that SKUs are being mapped to Products, not to vendor items.
Here's an example: You sell an Office Desk. You can purchase that same desk from vendors ABC and XYZ, and then you sell them on multiple platforms, and/or with different bundles. In this case, the product name can be “Office Desk”, one vendor item as ABC-OD, and another as XYZ-OD, followed by your marketplace SKUs.
If you do not have product being purchased from multiple vendors, you can technically have your product name same as your vendor name.
Example screenshot below
