To Begin with, you should look at the graph below. It shows you a function with one point being (x,f(x)) and another point being (x+h,f(x+h)). Notice how there is a line drawn going through these points. This line is called a secant line. The difference quotient is really just the slope of this secant line going through point A and B.
The letter h used in the formula is really just delta x in a shorter way to write it.
The tangent line is found as the letter h, the distance between the first point to the next point, gets smaller. This is because tangent line does not go through the graph but only touches the surface of the function once. As the distance between the points reaches 0, it is closer to being a tangent line which represents the derivative of the function, which you want to ultimately find and be familiar with.
