A sheet is one table of data inside your datasource. If you’ve used Excel, it’s exactly the tabs along the bottom of a workbook.
Each sheet has:
A CSV file has exactly one sheet. An Excel workbook can have many – and that’s the whole reason to use Excel: you can keep related tables side by side in one file.
Some data doesn’t fit neatly into "one value per record." A product has one name and one price (master data), but it might also have a dozen technical specs (related data). You put the products on one sheet and the specs on another, then link them with a data group.
Among your sheets, one is the master: the sheet whose rows define your records. One master row equals one merged result. Every other sheet is a secondary sheet, pulled in through a data group whenever a record needs it.
See how the master sheet works: The Master Sheet.