Here is the more detailed example:
I would describe the process as follows with a hypothetical research issue.
Let's suppose that you began your investigation about your ancestors by talking to your father (who is fortunately still alive), He tells you the names of your paternal (father's) grandparents. The natural inclination of a beginning genealogist would then be to try and discover more "information" about these paternal grandparents. (Of course, this hypothetical could apply to any generation of ancestors going back in time). Hypothetically, you never knew either of these grandparents because they died before you were born. The standard Research Cycle shown above, would have you off looking for information about your grandparents, likely searching for their names in some online record or another. But since this is my hypothetical, the search turns out to be unproductive, no matter how much you search, you cannot find anyone with the names given you by your father (or aunt or grandmother or whomever). You search for years and finally conclude that your grandparents (or great-grandparents etc.) may have appeared on the earth as aliens from another planet.
One day, it finally occurs to you that your father may have been wrong. So instead of looking for the names of your grandparents, you begin investigating your father. Where do you begin? Well, since in this hypothetical, you are now gaining some experience, you happen to read a blog post by someone living in Provo, Utah that says to start with a place rather than a name. Since you (hypothetically) now are beginning to realize that genealogy involves mostly searching for documents and than just names, you think back and remember that your father said he lived in Virginia while he was very young. You get permission from your father and dig around in the few old documents your father has stashed away and find your father's old grade school report card. (This old grade school report card is a source, that is a document that contains information about the past). You now have a specific place where your father lived at a specific time. You then begin looking for documents about your father that may have been created at the specific time and place you identified from a source. That source, the report card, contains "evidence." That evidence is valuable because it establishes the time and date of an event, in this case school attendance, for an individual in the past.
How good is the evidence? Well, you can get all bogged down in that subject, but remember, this is my hypothetical. The report card purports to be a document created at or near the time of an event (school attendance) that can be used to establish where that even occurred with some degree of certainty. (More about evaluating documents and evidence in the future). The information contained in that report card is evidence of the place where your father lived at a particular point in time.
Now, you begin the next step, identifying where additional sources might be located. Having just attended a class at a local genealogical society, you remember that there are two good ways to begin your search for historical documents (sources). You can look in the FamilySearch.org Research Wiki or in the FamilySearch Catalog. Because you aren't looking for names at this point, but you are looking for records that may contain a name, you find a huge list of documents that could pertain to your father and his family; church records, probate records, land records, etc. You begin to realize that without an awareness of the types of documents that may contain information about your family, you may have been wasting your time searching for a name.
You also realize that before you launched off looking for your paternal grandparents you should have nailed down some very specific "evidence" about your father. In this hypothetical, you are successful in identifying additional documents that contain information about your father. That information becomes "evidence" when you have examined it closely and then take the time to evaluate the information for consistency and reliability. Guess what? Your father told you the wrong names for his parents. With the information (now evidence) you have obtained about your father, you find further documentation about your grandparents and you are on your way to learning about your ancestors. But, guess what? You are just beginning the process.