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Component is the more correct term for what we’ve been calling a widget. The things you put in a GUI. The things a user sees and interacts with. Text fields, buttons, scrollable lists, radio buttons, etc. are all components. In fact, they all extend javax.swing.JComponent.
A widget is technically a Swing Component. Almost every thing you can stick in a GUI extends from javax.swing.JComponent.
In Swing, virtually all components are capable of holding other components. In other words, you can stick just about anything into anything else. But most of the time, you’ll add user interactive components such as buttons and lists into background components such as frames and panels. Although it’s possible to put, say, a panel inside a button, that’s pretty weird, and won’t win you any usability awards.