The Three Pillars
DAW (Software)
Digital Audio Workstation — where you record, edit, arrange, mix, and export. The 'brain' of your studio that processes and manipulates audio data.
Audio Interface
The bridge between analog and digital. Converts microphone/instrument signals to digital (ADC) and digital back to analog (DAC) for your speakers.
Monitors/Headphones
How you hear the result. Studio monitors are designed for accuracy, not flattery. Consumer speakers color the sound — monitors tell the truth.
Summary
A weak link anywhere breaks the chain. A great mic through a bad interface sounds bad. A great mix through bad monitors leads to bad decisions.