Rooms allow you to host activities or just chat with other users.  They are public by default but join permissions may be set that only allow invited members to join.

Rooms allow users to find a group chat where other members are hosting live events or chatting at that moment, so in essence are "live" and thus differ from other Chats.

You can find active Rooms in your Circles, or under the "Live Rooms" banner on the Discover home page.