It's about saving on the cost of production and choosing to trade even if you could produce something yourself. Here's a lame example.
Farmer A
Costs him $1 to make 1 lot of meat
Costs him $3 to make 1 lot of potatoes
Farmer B
Costs him $6 to make 1 lot of meat
Costs him $4 to make 1 lot of potatoes
They
could produce both themselves and be self-sufficient. If both want one lot of meat and potatoes and neither trade :
Farmer A produces both for himself, and he has one lot of meat and one lot of pototates, which he has spent $4 to produce.
Farmer B produces both for himself, and he has one lot of meat and one lot of pototates, which he has spent $10 to produce.
BUT if each produces two lots of what they are most efficient at and then trade -
Farmer A has one lot of meat which cost him $1 to produce, and a lot of potatoes which he received in trade for a second lot of meat, so he has one of each but only spent $2.
Farmer B has one lot of potatoes which cost him $4 to produce, and a lot of meat which he received in trade for a second lot of potatoes, so he has one of each but only spent $8.
So, even though Farmer A can produce potatoes cheaper than Farmer B, he's still better off spending all his resources on producing meat and trading for potatoes.
EDIT
I've always understood the idea of spending money on goods in order to help the economy. The more money you spend, the more others can produce, which means more for you to buy, and the more they spend, they're giving other businesses the opportunity to spend as well. It's a very simple concept, but it seems that many people take it for granted, constantly complaining that things are too expensive. We all get paid, we all spend, we all need stuff. If no one spends, there's no money going around, which would in turn effect the amount of money you get paid, so all of our businesses would suffer.
Yeah. In my previous life in retail finance, I got so fed up of people saying "Oooh look at those low interest rates. In tough times like these, it makes you think they don't
want you to save." Ummm...... yeah, precisely. The Bank of England (for instance)
doesn't want you to save. You
spend your way out of recession, for precisely the reasons you just explained. There are people who have walked the Earth working and consuming for double, triple the length of time you have, and still don't understand how things work nearly half as well. Or, they just like to complain. Or a bit of both.