Solar hot water works by converting the energy from the sun into heat to warm the water. The system has a collector which is a dark panel that is placed on the roof of your house and collects the heat of the sun. Water runs through pipes or channels in this collector and is heated as it passes through. The hot water is then stored in a cylinder for later use.
Solar panels work by converting light into electricity. They do this by using photovoltaic cells which produce DC current when light falls on them.
An inverter converts the DC power generated from solar panels into AC electricity which is the type of power that comes out of the power points in your house.
This term means that your solar system is connected to the electricity grid which is the power lines that supply power to your house and the other houses in your street. By being grid connected means that when excess power is being made by your solar panels they can flow back into the grid to power other homes.