A Contact is an item within your organisation that represents and external Email address. It can be used store that address in your address for all email users within your organisation. It also allows you to forward mailbox and Distribution List emails to email addresses that are external to your Organisation. A Contact has a Name and Email Address field.
Name: This is a friendly name that will be shown in your organisations address list.
Email Address: This is the external email address for the contact.
When adding members to a Distribution List you will see that any contacts you have created will also appear there. Also when editing a users mailbox any contacts that have been created will be available as options for forwarding email.