If a user registers, and adds products to their order, they may complete the checkout process. Even if a user doesnt complete the checkout process, their order is recorded as a temporary transaction until they complete checkout.
This enables a customer to return to your site, and complete their transaction at a later date, incase their credit card failed for example.

Once a customer has placed an order, you are able to set both the payment status (pending, paid or failed) and the order status (received, processing, dispatched or cancelled).
When you change either the payment status or order status, an e-mail is generated to inform the customer of the status of their order. These emails can be found in the skins/_mail folder and you can customise them either from your admin control panel, or by using your code editing software and then uploading to your server.
In the case that an order is cancelled for any reason, you are able to send a personal message to the customer to inform them of any issues.