You can describe element as a simplified tag for an information in your feed. PRODUCTNAME element describes a product name, EAN element describes a unique product code, etc.
What are elements used for in Mergado?
To search in products and create queries (see more here).
With help of elements you add various information to your feed. E.g. adding GIFT element to products with a gift offered to customers.
You can also hide an information using elements (see Rules).