Entity is the base class for pretty much everything in SketchUp. But since C doesn’t support classes and inheritance we need functions like SUComponentDefinitionToEntity to cast between types. You would use SUComponentDefinitionToEntity when you need to call any of the functions in SUEntityRef.
Entities are containers for Entity objects. The model has a collection - this is the root of the model hierarchy. And each component definition has an Entities collection.
That depend on the type of Entity. Edge, Faces, Groups etc - all of them are of type Entity.