I have been trying to learn the basics of 3d stuff in xna and I have read a lot of material, yet, I am still so muddled up between: " Whats the difference between a mesh and a bone ?" Further down the line, a basic question: "what is a mesh and what is a bone ?". From what I understand, mesh is a set of vertices, which the model is made up of. Bones is something like the armature of the model. But, when I compile the code and run in XNA, the Model class treats them in a different manner, I think. Thus, somebody please clear this stuff for me. Thanks

Well, yes the bones of an XNA model make up whats called the armature in some 3D packages. They are used to deform/animate the model. What might confuse you here is that default Model class of XNA dosen't do any skinning, so bones are only used to position single meshes relative to the model (at least if you draw your models like in the XNA tutorials).
If you want to do real skelettal animation (i.e. deform your meshes vertices using the bones) you have extend the model class and the content loader for models. There should be a tutorial on how to do that somewhere on the XNA Creators Club website.

Yea, I understand. This suddenly makes so much sense now.

Thanks a lot, sebbit for explaining it and the blog post @ Shawn Hargreave's site was awesome. He cleared all clouds of doubt in my head, yaay!

Thanks a lot for the replies!