Here's an actual workflow I have worked on:

"I'm at 50.00000N, 15.00000E (a GPS coordinate). How do I get to the Foo Bar in Baz City (a text input or selection), by public transit (a choice of transport modes)?"

- Reverse geocode "bus stop or train stop or tram stop near 50 N, 15 E" - "there's a bus stop named Xyzzy at 50.0012 N, 15.0003 E"

- Geocode "Foo Bar, Baz City" - "51 N, 14 E"

- Reverse geocode "bus stop or train stop or tram stop near 51 N, 14 E" - "there's a train station named Baz City Central at 50.99998 N, 14.001 E"

(plus routing and scheduling on top of that - but that is beyond the scope of geocoding, which is one part of the toolchain)

Other example: "I'm at 50 N, 15 E; get me a list of restaurants around here" (optionally: non-smoking, currently open - not sure if Nominatim directly supports filtering like that)

To geocode means to transform an address into a location.

So say you have a textual address and want to know where it is located. You feed it into a geocoder and it returns a location.

The same database can often be used to go the other direction, taking a location and returning the name and other details about a place.

Here's a use case I've encountered: Find me all the auto repair shops within X miles of this street address, where the database of repair shops is populated from street addresses as well.

I've worked on a few projects where I've needed to know pairwise distances among a set of addresses.