The Spirit World
The Spirit World is of a multi-layered structure. It is divided into many different levels (dimensions) according to the state of mind of the spirits who live there.
Haunted houses
Many people know of someone who says that their house is haunted and has had a variety of unusual events occur. Normally, you "die" and go to the spirit world. Some people die but don't go to the spirit world - instead they stay around the earth plane. These people may not accept or realize that they're "dead" and frequently stay in places familiar to them such as houses and the like. All spirits can affect the earth plane in various ways and frequently these "earth-bound" spirits make themselves known as they go about their business. Some are quite harmless and others are not. Spirit loved ones may not be able to get through to tell the earth-bound spirit person that they should be in the spirit world instead. There are mediums on the earth plane who perform rescue work. The medium works with other spirits to help bring the earth-bound person to the spirit world.
Medium (or Spiritual) and Psychic readings
The primary difference between a medium and a psychic is the way information is transmitted to the person. The medium's approach is passive. The person becomes the pathway for the information to come through, and the information is coming from people in the spirit world, not from the medium personally. A psychic's approach is active. The person plays an active part in getting the information - it may be picked out of the surrounding vibration or come from the psychic personally.
People who give readings will generally describe themselves as either a medium (giving spiritual readings) or a psychic. Any person giving a reading or a message could be doing so mediumistically (passive), psychically (active), or some combination of both. It is not a simple matter to tell where the reading is coming from and mediums take extra precautions to be sure that the reading is not coming from them personally.
Being a medium (or psychic) is a very large responsibility and typically takes years to develop. You do not have to be "born with it". Every person has the basic capability, although few develop it. Anyone can pick up a French horn and make sound, but only a few will learn to make beautiful music with it. Becoming a medium (or psychic) is the same way.