To put it simply in relation to production, there is audio and there is MIDI. Audio is an mp3, wav, flacc etc that when you put the song into your DAW it makes a sound that is a "prerecorded" bit of data. A piece of audio can only be that one piece of audio and that's all it will ever be. MIDI however is a bit of data that can be edited. It's given a note name to make things easier since I assume it started from keyboard synthesizers. You can attach any piece of audio to a note of MIDI.
So say you have a kick drum tunes to C minor mp3 . That kick drum mp3 will always be a kick drum mp3 and nothing you can do will ever change that. Now if you have a midi note playing C minor, you can make it anything you want it to be. C minor is just the note being played to tell the computer to play whatever is attached to that note. It could be any piece of percussion, a whole song, that kick drum mp3, etc.
In choice of MIDI controllers, it's solely up to the user for whatever purpose. A guitar plugged in and playing notes, is not playing midi. You're recording each note to an audio sample by each single note and/or chord it can play. A MIDI guitar can be changed to say, playing a vst plugin like Massive by each note so it can be modulated as you play. What you choose is your own choice, some things are better for others. If you pick up a midi keyboard, it plays notes based on what is pre-saved into it usually, but you can change it if you'd like to play different notes. However it won't play anything until you tell it what it's going to play. Actual synthesizers play midi notes, but they have their own modulation equipment built into the actual keyboard.
There are things like Abletons Sampler, that you can put an audio sample into it and modulate it using MIDI, but it's the exact same concept.