Clicking on the Start button in Windows 7 brings up, among other items, the Shut down button in the lower right-hand side. Next to that button is a triangle; click the triangle to bring up the other shut down options, as shown above.
Option No. 1: Shut down. If you click the Shut down button itself, without clicking the triangle and opening the other options, Windows 7 ties up all the loose ends and shuts down the computer completely. You would normally do this to turn off your work computer at the end of the day, or your home computer before going to bed.
Option No. 2: Restart. The Restart button "reboots" your computer (it is sometimes called a "warm boot" or "soft boot.") That means it saves your information to the hard drive, turns off the computer for a moment, then turns it back on again. This is most often done after fixing a problem, adding a new program, or making a configuration change to Windows that requires a restart. Restarts are often needed in troubleshooting scenarios.
Option No. 3: Sleep. Clicking on Sleep puts your computer in a low-power state, but doesn't turn it off. The main advantage is that it allows you to get back to work quickly, without having to wait for the computer to do a full reboot, which can take several minutes. Normally, pressing the computer's power button "wakes it up” from Sleep mode, and is ready for action again within seconds.
Sleep is a good mode to use for those times when you'll be away from your computer for a short period. It saves power (which saves money), and allows you to get back to work quickly. Keep in mind, however, that it does slowly drain the battery; if you're using a laptop and are low on power, this mode could eventually result in your computer turning itself off.
Option No. 4: Hibernate. Hibernate mode is sort of a compromise between Shut down and Sleep modes. It remembers the current state of your desktop and fully shuts down the computer. So if, for instance, you have a web browser open, a Microsoft Word document and a chat window, it would turn off the computer, while remembering what you were working on. Then, when you start up again, those applications will be waiting for you, right where you left off.
Hibernate mode is intended mainly for laptop and netbook users. If you'll be away from your laptop for an extended period, and are worried about the battery dying, this is the option to choose. It doesn't use any power, but still remembers what you were doing.
There you have it. It's a good idea to experiment with the various shut down modes, and learn what works best for you in a given situation.