You guys are still ovecomplicating it. The muffler is the part that quiets the sound, and the exhaust system is the combination of the muffler and the pipe that connects it to the engine.
It sounds to me like he's actually asking about mods, though, asking why a full catback is better than simply a muffler.
If that's the case, a muffler will mostly have an effect on the car's sound, and only a minor power gain. The stock piping will still remain, and it will restrict the airflow due to small diameter and many bends. An exhaust system usually starts at the Catalytic converter, and has a larger pipe, which, more importantly, is also much straighter, and also made of a finer, smoother, metal, allowing unrestricted airflow. On a naturally aspirated car, such a system can provide moderate gains, but with a turbo, major improvements in the powerband and torque curve, as well as max figures, can be seen.