There are two main groups of companies:
Is a company that use your services or products.
The work your staff do for a customer can be divided into projects
If you add people to a customer, they will be assigned to the group: Contact People
These people can't fill a timesheet.
Your own organization or branches
This type of company contains your staff, contractors and internal projects.
If you define tasks and absences for that company, only its people will see them in their timesheet.
If you inactivate or delete the default tasks and absences, they won't appear anymore in their timesheet.
The work you do for your organization can be divided in projects.
And projects can be divided in subprojects.
The people that work for your organization can be either Staff or Contractors.
You can set different authorization profile and screen layouts for both groups.
If your organization has other branches or affiliates in different locations, you can divide them in separate companies.
Then you can define different settings for each of them, eg: another currency, date format, week, absences, tasks,...