The model is good at generating text. It has no access to your database, your API, the filesystem, or the internet. unless you give it tools.
A tool is:
When the model decides to invoke a tool, you run the function and return the result. The model continues the conversation with that result in hand.
Without tools, everything the model "knows" is what it learned in training or what you put in the prompt. With tools, it can query the real world on every turn.
Look at the right pane. One option pretends to have a registry, the other actually gives it one. One is hallucination, the other is tool use.