Depending on the type of ingredients and equipment you'll be using to make your beer, there are three primary methods for creating the wort.
You can use malt extract, or conduct a partial grain (AKA specialty grain) steep, or conduct a full all grain mash. There are various benefits and drawbacks to each method.
Extract Brewing
The simplest way of creating wort is to use only malt extract and hot water. Malt extract is a condensed wort that is produced by the mashing process with most of the water content removed. By adding liquid or dry malt extract to boiling water, homebrewers can skip the mashing process and go straight to the boil. This method is a great option for homebrewers of all experience levels but can limit the various styles of beer you'd like to create.
Partial Mash/Steeping
Partial Mash/Steeping (AKA specialty grain steeping, or mini mashing) is a method commonly used by homebrewers to gain more creative control over their recipe than using the all-extract method. Though malt extract is still used, the homebrewer uses grains to impart more complex flavour to the beer. By steeping a small amount of these specialty grains (common examples: chocolate, crystal, and carapils) in hot water before adding the malt extract, the homebrewer can create more styles of beer than by using only malt extract.
All Grain
All grain brewing is a method of running a full mash, therefore retaining total control over the beer. The homebrewer has the ability to build their recipe completely to their liking and is not limited by using malt extract. No malt extract is used in all grain brewing.