A product catalog contains the products that an organization sells. These products can be added to Opportunities/Quotes/Orders/Invoices as Opportunity Products/Quote Products/Order Products/Invoice Products respectively. This way the products can be tracked as line items in individual entities such as opportunities, and also can have entity specific functionality.
Q: When a new field is created in say the Opportunity Product field and that field is needed to be mapped to say a Quote Product field, what are the steps that should be taken?
A: Microsoft released a KB article that describes how this can be achieved. The KB can be found at http://support.microsoft.com/kb/914921