DE is desktop environment (like gnome, kde, xfce,…) And WM is window manager (like i3, sway, xmonad,…) Which is just a slim version of a de, they usually don’t include things like guis for settings, file managers, … and you just pick what you like and use that. The window manager is responsible for placing the windows in your workspace and most standalone wms are tiling, so they use your monitor space efficiently instead of putting floating windows all over the place. Basically the DE (or WM) is what you interact with most on your PC and a lot of beginners distrohop just to use a different DE when in reality you can just install the other de on your existing system, log out and select the new DE in your login screen.

The biggest differences between distros nowadays are their release cycles and their package managers (and the tepos they’re using, like Ubuntu and Debian both use apt, but have separate repos)

And no you can’t really change distro without reinstalling, you can change kernels tho, every distro will update their kernels from time to time and it’s just a matter of install the new package and reboot into the new kernel.

With separate directories you probably mean partitions, which I’d also say it’s advisable to have your /home partition separated from your / partition. That way if you ever have to reinstall or want to change distro you can just install into the root partition and afterwards add your old/home partition to /etc/fstab and keep all you’re user data and configuration