Opportunity vs Lead

Holy moly, this whole business of Opportunities vs Leads can be a confusing one. Unfortunately for those of us who find it confusing, Leads, Opportunities, Accounts, and Contacts are the lifeline of Salesforce. They are the fundamental blocks on top of which everything else is built. So understanding them is pretty darn important.
Here are the major differences you need to know:

Leads can be converted into Opportunities

The very first thing you should be aware of is that Leads are converted into Opportunities. Opportunities are just converted Leads. If you convert Opportunities backwards, they'll become Leads! (You actually can't do this, I'm just making a point). Think of an Opportunity has the piece of work that will come out of qualifying a Lead. The Lead is 'hands-up, I'm interested!'. The Account and Contact is the actual data about that person/company when it's been confirmed they actually are interested. And then the Opportunity is the piece of work that is related to the Account and Contact that will hopefully be making you some bank.

Opportunities are more likely to create revenue than Leads

It's like Leads are the first selection process and Opportunities are the short-list. The assumption Salesforce makes here is that when you an Opportunity is created, some sort of exciting revenue possibility has been uncovered. A good way to set standards for this is to actually put an expected revenue amount into the Opportunity when it's created. If you can't do that, perhaps it's not quite time to make to conversion.

The stages go: Leads -> Account and Contact -> Opportunity EXCEPT FOR...

Ah, the exception. On a usual day, your sales rep would look at a Lead and think, 'Oh this could be good. I think this would be worth following up.' From there, that would convert the Lead into an Account and Contact. Then, if the Account + Contact combo is looking extra promising, the sales rep might convert that into an Account+Contact+Opportunity combo. The exception to this process is when a sales rep looks at a Lead and goes 'My God, that's a sure winner. No doubt about it, this guy is going to make us some money!' Then the sales rep can choose to convert the Lead straight to an Opportunity. Boom. Level up. Skip a year. Make the moola.

An Opportunity is a potential sale

Not an account. Not a business. Not a person. A potential sale. It is not the place where you store all the data on that particular person. It's the main substance of your sales funnel and what should get your sales reps riled up and ready to go every day.

Ultimately, it's up to you

At the end of the day, deciding what criteria a Lead should meet to be converted into an opportunity is completely up to you. Every business will look different, but the key here is to have a precise definition. It should be easy to understand, and everyone should be on board with it. Without a clear set of rules on when a Lead becomes an Opportunity, you'll be causing confusion, lose potential sales, and the whole company will be in uproar. It will be chaos I tell you - CHAOS!