The easiest analogy for a body corporate is like a company. In a company, there is a board of directors and a group of shareholders. The company itself owns the company assets and the shareholders each own (in effect) their proportionate share of those assets.
So if you own shares in BHP you own a (very small) proportionate share of all of BHP’s assets – from copper and coal mines to shale oil reserves and so on.
A body corporate is the same but on a much smaller scale. Inside a body corporate are individual lots and common property. The lots (or units/apartments) are the pieces of property inside the body corporate that are owned by the actual owners themselves – which is where owners live in or rent out. The body corporate owns everything else, which is known as common property – like the pool, the gardens, roads, lifts etc, and each of the lot owners own a proportionate (but not separate) share of this common property.
Each of the lot owners is a member of the body corporate by virtue of their ownership of a lot. They can only leave the body corporate by selling their lot – in the same way that you leave BHP by selling your shares.
The body corporate is a separate legal entity and can enter into its own contracts and manage its own legal proceedings (through its committee).