Shop
The Shop is a place on the website where you can sell and purchase items, whether they be worn on your Character or for use by Developers. Said items usually cost 
Sand Cash (although some are free) to purchase, and some are exclusive to Events or specific Users.
Cosmetics
Cosmetics are items in the Shop that can be seen on your Character. These can go on your Head, Torso, or your Right Arm if it's a Tool.
Hats
Hats are worn on your Character and are 3D models.
Only a few Users have access to uploading Cosmetics, those being Events, Bob, Thomas, Yek, Max, Damir, Sulko, MixaMega, and possibly others.
Clothing
Clothing are UGC (User Generated Content) anyone can make clothing and set them to cost either nothing or cost a certain amount of Sand Cash.