The difference is that bakeries etc. tend to add a lot of sugars and preservatives.
> Per that definition, items like white vinegar and corn syrup are not processed foods?
Yeah, so not a perfect definition, but a good rule of thumb.
The general idea is that you don't want some big corporate to prepare the food for you, it is better to prepare it yourself. If you prepare the food yourself, you have more control over how healthy it is. This approach serves my friend quite well, he reports that he feels more energetic when he avoids "processed" foods as per his definition.