When you put pictures in a document or put other documents in a document or put a spreadsheet in a document you do it thru inserting or pasting the object (document, picture or spreadsheet).
By default when you just do a normal insert or paste you will embed the object. Embedding is when the object is put in the new document and there is no linkage to the original object. If it was a spreadsheet you embedded, then values that appear in the copy that you pasted in the document will stay the same even if you go back in the spreadsheet and change values.
If you link the object in the document then when changes are made in the original object they also occur in the document where a copy of that object was pasted.
When you go to insert or past objects in a document if you will look under the paste or insert button you will see a down arrow and you can choose other ways to paste or insert including linking the item. If you do your paste or insert thru the edit menu you will see besides paste and insert, a choice for paste special which will give those options. Likewise if you use the right click menu you will see paste and paste special.
Usually when you are pasting or inserting you want the default where it just embeds the object and there is no connection. However sometimes you want your document to always be updated when the original object is updated.