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What's the difference between recording, editing, mixing and mastering? or better yet what is mixing and what is mastering?

So I am starting a home studio, and i plan to have my setup as mics into mixers, into audio interface, into computer. What audio interface is recommended, and what software is preferred? Does and Audio interface effect the sound quiality of a recording? and how would one go to connect their...

I am currently using Audacity as my recording software, and obviously it produces mediocre quality sound at best. what software should i use? i am looking for software that produces best sound relative to its price... I am on a tight budget :P

I use a Behringer xenyx 1204 USB mixer. Originally when i plugged the mixer into my computer, all sounds from my computer would play through the mixer, so when i plugged in headphones into to headphone jack on the mixer, i would hear everything from the computer through my headphones through the...