All answers here are obtained from http://forum.xda-developers.com/showthread.php?t=2010338 in order to benefit the community here. Credit goes to the original author. Head on to the link to read the full version as those that are listed here are only the important/main points. Some additional points which are not available on the original thread are added, tho.What is “root”?Root essentially means that you have root (or superuser) access to the file system on Android. It is similar to being “administrator” on a Windows PC. It has nothing to do with your device or the bootloader, it has to do with the Android OS (i.e., you cannot “root” your device – you root the Andoid build that you are running). To have root, you need to be booted into the Android OS that you have rooted. If you are in fastboot mode, root is irrelevant.
What is a "bootloader"? Without getting into too many technicalities, the bootloader is essentially the program that gets loaded first when starting your device, and it is responsible for booting the Android kernel. Think of the bootloader as the BIOS of a computer.
What does it mean if my bootloader is locked/unlocked? Most (if not all) devices are shipped from the manufacturer with locked bootloaders. This is for security reasons. A locked bootloader does not allow easy flashing of images, which means that it is difficult to change or modify the operating system. Unlocking a bootloader (using fastboot) on most Nexus devices results in a complete loss of all personal data from the device. Having a locked or unlocked bootloader has no bearing on the functioning of the device. Unlocking it gives you more options to play around with the OS. Additionally, an unlocked bootloader means that you can easily root your device no matter what -- unlike most non-Nexus devices, if you lose root, it is trivial to get it back.
What is "recovery"?Recovery is like a mini OS, which allows you to perform various functions, usually related to flashing files to your device, or updating files, or backing things up, etc. The stock image has a recovery included, but its functionality is very limited. There are a number of custom recoveries available, but the two most popular for the Nexus 4 are CWM and TWRP. There are various versions of each. More details to come in this section.
What is a "ROM"?A ROM is slang for an mobile OS build.
What is the difference between a "stock ROM" and a "custom ROM"?A stock ROM is a ROM that is built by Google and is signed by Google’s platform keys. Everything else is a custom ROM.
If I unlock my bootloader, is that the same as root?No, as was mentioned above, unlocking the bootloader allows you to (among a few other things) flash images easily to the device when not booted into the Android OS. Root allows you access to manipulate the files WITHIN the Android OS.
If I want to root, do I have to unlock my bootloader?Yes. Because you will have to flash custom recovery in order to flash a file which grants you root access. For more information on rooting, refer to following points in spoilers within this post.
If I unlock my bootloader, does that mean that I have to root?No.
If I unlock my bootloader, do I have to flash a custom ROM?No.
Do I need to root to flash a ROM?No.
Again, these FAQs are not written by me and is obtained from http://forum.xda-developers.com/showthread.php?t=2010338. Credit goes to the original author. Click on the link to read full version of the basic information as those listed here are summary of main points / important points only. 
Feb 8 2013, 02:47 PM
Nexus 4 Tips & Tricks
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