Capitalism is an economic system in which most of the industries and businesses in a country are owned privately, rather than by the government. Capitalists are people who use their own wealth (or other people's money) to make more wealth. The extra money they make is their profit. Some capitalists manufacture things to sell at a profit. Some are store owners who sell goods at a profit. Others are financiers or investors who lend their money in the hope of getting more back.
No matter what their business, the aim of capitalists is to make a profit. But this does not mean that they can charge very high prices or sell bad goods. If they do, they will probably lose business to others who sell better goods or have lower prices. Competition forces capitalists to sell the best possible goods at the lowest possible price. Competition is an important feature of capitalism. The profits made by individual capitalists in free competition benefit the economy of a whole country. As capitalists make profits they can expand their businesses and put more people to work.
In the Middle Ages, Europe had a feudal agricultural system. Land belonged to the church and to the nobles and was worked mainly by serfs. Few people were free to own and control their own businesses except in the cities.