Your Inventory is where you will carry all your items, excluding those you put into storage. It consists of 27 slots, which are only visible when you open your inventory (default key E) and the hotbar, with 9 spaces, which can be accessed even when the main inventory is closed.
Typical Inventory items
Back-up tools, ores, decoration blocks, large amounts of construction materials, etc.
Typical Hotbar items
Sword, pick, shovel, axe, food, torches, a stack of cheap blocks, bucket of water, watch, etc.
The Inventory also has a 2x2 crafting area which allows you to create basic items such as torches and a crafting bench.