Could someone explain the relationship between texture sets and Textures? If doing something like changing a table from wood to stone using only vanilla textures which would need to be altered? Both? Sorry if this is a stupid question. I've haven't done any retexturing at all. I've been watching that rainbow chicken thing on YouTube but it doesn't really explain much.

Textures (as Skyrim uses) are DirectDraw Surface files (*.DDS), typically using a DXT compression format (though the game engine recognizes various other formats)

Texture sets are a set of textures assigned on the mesh level as a default set, or as a form object used to override the default through the Creation Kit and game engine.

It is exactly as its name says: a set of textures.