The AW16G has pads where you can assign sounds, usually something like a drum or effect. The idea is that you can "play the pads" to add sounds. For example, you could sample a cowbell, and use the pad to create the opening to Honky Tonk Women by tapping the pad.
The audio tracks are the things that hold your various tracks of the song, just as you would have on a regular tape machine.
Virtual tracks are basically alternate takes of the original track. You have have multiple takes for something like a vocal track, then decide which of the 8 attempts is the best. You don't have to erase the original to make a second try. That's really handy when you're trying different things. You can have 8 different versions of a track.