Pages determine the structure of your web-site
The navigation, or the menu, is links that helps the user navigate through the pages on your web site. These links are automatically created by CMS Made Simple from the page structure. This hierarchy is what drives the menu you see on the left of this page.
Pages can be in several levels, like a tree of generations. The top level in the menu are the parent pages. Each parent page can have children pages, which in turn can be parents to other children.
The template determines where on a page the navigation is placed.
You can create any kind of navigation you can dream of by customizing a template for Menu Manager. However, the default templates should work for most situations as the menu basically is just an unordered list that you style to your liking with CSS. Web is full of good articles about styling list of links, one of the best is listutorial at maxdesign(external link)
Pages in the CMSMS Admin Panel
You add pages, as well as other content (see next chapter), in the CMSMS Admin Panel from the Content -> Pages menu.