What is the difference between standard functionality and customization?

The distinction is less about what is possible and more about who is responsible for maintenance.

Standard

Built-in functionality. Microsoft tests it with every update, documents it, and other consultants are familiar with it. There is no cost of ownership.

Configuration

Customization within the framework: custom fields, forms, views, and business rules. Generally carries over through updates and can be done without a developer.

Customization

Code and workarounds. Entirely possible, but they must be tested with every update, documented, and someone must know how they work five years from now.

The rule

Use the standard where it works. Configure it where it does not. Customize only when the first two demonstrably fall short—not simply because current workflows are used to something else.