Tequila is a distilled spirit that is produced from agave plants. Technically it’s a subset of mezcal (which includes all agave based distilled spirits) that uses only blue agave plants and is distilled in specific regions of Mexico. It’s the same concept as Champagne — a product that is pretty much identical to “sparkling wine”, just from a specific region in France.
There are a few different categories of tequila.
The most prominent difference comes with age. “Blanco” or “silver” tequila is usually taken straight off the still and bottled, or at most aged in oak barrels for a few days. “Reposado” tequila is aged between two months and a year, and “anejo” tequila is aged between one and three years.
The composition can also differ. Some tequila will proudly proclaim that they are made from 100% blue agave plants, but the ones that don’t are typically called “mixto” and are a lower quality blend of blue agave based tequila and other spirits.