Demand and conversion
An ordered model of the steps between first contact and purchase, used to locate where people stop rather than to describe how they think.
The funnel is a measurement instrument, not a theory of behaviour. Real buyers loop, leave, return through a different door and arrive already decided; the model is still useful because it tells you which step loses the most people, which is the only thing a diagnosis needs.
Its value is in the step-to-step rates rather than the end-to-end one. An overall conversion of 1.8 % says nothing actionable. Knowing that 84 % of the loss happens between viewing a product and beginning checkout points at one page.
Attention goes to the top of the funnel because it is where the volume is. The money is at the step with the worst transition rate, and that step is usually cheap to fix precisely because nobody has looked at it.
The definitions are the easy part. Whether the figure on your dashboard was computed this way is a different question, and usually the more expensive one.