I recently read a Reddit post about the difference between a token and coin. It honestly really unlocked something for me regarding my understanding of how blockchains work, and how smart contracts work. So basically, my summary is as such: a coin is a cryptocurrency built on a blockchain. A token is something that deploys from that blockchain, like the ERC-20 token standard.
For the Ethereum blockchain, ERC-20 tokens use the Ethereum blockchain for transactions. This is why Ethereum gas is still needed even if you are transacting with an ERC-20 token. Here's the original post I read, you should give it a read if you found this post interesting:
I'll leave with this drawing I made that sort of relates to the above:
Until next time,
Flarn