Spaces are Confluence's way of organizing content into meaningful categories. Think of it like having different folders into which you can put your work.
Confluence is a collaboration platform where you can organise all your work in one place.
Spaces are the categories within Confluence to organise your work - think of them as the highest-level of folder type which can be broken down into trees of pages (parent and child pages).
There's some good information on what Confluence is on the main page for it, and information on Spaces in Confluence Support.
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Simple speaking, Confluence is document collaboration tool. It helps you create and organize all your organizations/projects knowledge base, documentation at one place.
Space is organization/categorization mechanism in Confluence. It is just like project in most other tools, where for each project you can have different setting and execution mechanism, similarly for you can have different settings, and template for space.
In other word we can also say space is collection of related pages of documentation or knowledge base.
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