There are lots of people in the world and potentially they could all be your customers.
But some of them are too far away, some speak a different language, some cannot afford your service, and some may already have your product or service.
The people who you can realistically service with your current resources are your market.
If you grab someone's attention even a little bit then, congratulations! That person has now entered into your sales funnel.
The bad news is that sales funnels are a lie.
A funnel is a tool that directs a large volume of material from a large area into a narrow opening. The material natural flows down a funnel without much effort. If your business model operated as a funnel you would have more customers than you knew what to do with and you would either have to expand capacity (and look more like a pipe) or have long lines of angry customers.
A sales funnel is more like a sales sieve. The function of the sieve is to separate the finest smallest particles of a mixture. You pour a bunch of stuff onto a sieve and apply energy by shaking it about and viola the finest stuff makes it through. Sometimes you have to use a set of sieves with progressively smaller holes. Your market goes into your sieve and with follows-ups and other marketing efforts, you sift through the prospects and end up with customers.