Vim works in your terminal, doesn't work outside it, while
GVim works outside the terminal as an X11 client.
X11 is a protocol for handling graphical capabilities on linux. It doesn't have much to do with G/Vim other than rendering it on the screen (That said, you can see the differences for yourself by pressing
ctrl + alt + f<num> and starting a
tty session. You can get back to graphics by doing
ctrl + alt + f6 if I recall correctly).
vimrc is your Vim settings file. Settings edited here will be available for
GVim to use after a restart or a reload. However, there are some things that will be available in
Gvim that won't be on
Vim, mostly relating to graphics.
For daily use, I would suggest you use
GVim (don't forget to run
vimtutor first!). However, if you're in your terminal a lot, consider giving
Vim a shot instead. Also consider taking a look at the SU Vim tag, SO Vim tag and SF vim tag, so you can get explanations as to why some things work, and learn yourself how to be more productive when using Vim.
Also consider VimUniversity, and googling around for how to do things in Vim. You will be surprised.