Why do citations matter?
It is important to cite the sources you consult when writing a paper. You must give credit to authors whose works you have used, whether you quote them or not. By citing your sources, you provide evidence of your research and more importantly a trail others can use to locate the materials you consulted. Properly citing materials will help you avoid plagiarizing.
What is the difference between a direct quote and an indirect quote?
A direct quote (or direct quotation) is the exact words taken from an original source and used in a second piece of writing. 
An indirect quote (or indirect quotation) is the idea or fact taken from an outside source and used in a second piece of writing. The student uses his own words, but the idea or facts comes from the original source.
For example:
Original, from the 1858 version of the Communist Manifesto, by Karl Marx: The history of all hitherto existing society is the history of class struggles.
Direct quote: As Karl Marx wrote, “The history of all hitherto existing society is the history of class struggles.” This shows that orthodox Communists believe that the conflict between rich and poor is the driving force in world history.
Indirect quote: As Marx made clear in his 1848 book, all human history can be explained as a conflict between the rich and the poor.
Both direct and indirect quotes use the information from the original; The direct quote also uses the exact words, while the indirect quote does not. Both direct and indirect quotes need to be cited in the text and listed in the Works Cited / References page.
What is a paraphrase?
A paraphrase and an indirect quotation are the same thing. They contain the information or idea of another author, expressed in your own words. You must cite a paraphrase / an indirect quotation.
Do I have to cite a paraphrase? Do I need to cite indirect quotations?
You must cite direct and indirect quotations.
For example, imagine that you read this sentence in an article in the Guardian (a British newspaper), written by the journalist Rebecca Tavender: “Analysts fear that the advent of nanotechnology may lead to an increase in certain types of cancer.” You could paraphrase that information like this:
Nanotechnology has potential drawbacks. Some experts fear that the increase in nanotechnology may cause an increase in some types of cancer (Tavender).
You did not use the exact words from the Guardian article, but you used the idea, so you have to cite it. All you need to do is put the author’s name in the text, then list the article in your Works Cited page.