Source: Warhammer Fantasy: 4th Edition

Heroes
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Heroes are individual models that represent heroic leaders, people who are tougher, meaner and more powerful than the average warrior. Perhaps they are faster than a typical member of their race, maybe they are stronger, more skilled with weapons, or they could be natural leaders with the power to inspire others to greater deeds.

In reality an individual could have almost any combination of unique abilities, but on the tabletop we make three broad divisions which are quite sufficient for our purposes: Champions, Heroes, and Lords. In some cases they may be known by different names. Orc characters, for example, are called Bosses, Big Bosses and Warbosses.

Of course, these three types of valiant individual cannot really represent every nuance of distinction between mighty warriors, but it does enable us to fight with comparably powerful characters, whether they are goodly Knights or the most rotten-hearted Champion of evil.

Champions, Heroes and Lords have superior characteristic values as shown on the chart below.

MWSBSSTWIALd
Champion-+1+1+1--+1+1-
Hero-+2+2+1+1+1+2+2+1
Lord-+3+3+1+1+2+3+3+2

For example, in the case of men the values are as shown below.

MWSBSSTWIALd
Man433331317
Champion444431427
Hero455442538
Lord466443649

In the case of Orcs the values are as follows. Note that Orcs and Goblins have different names for the three types of character, but the values are exactly the same.

MWSBSSTWIALd
Orc433341217
Orc Boss444441327
Orc Big Boss455452438
Orc Warboss466453549

As you can see from these examples the three types of character are quite different. Champions are brave fighters, with an extra attack in combat and superior weapon skills, but they are not especially good leaders. Champions are therefore useful individuals when it comes to bolstering the fighting power of a unit of troops, but they are not great war leaders. Heroes are more resilient and even better fighters: they will fight on if they suffer a wound and provide extra leadership. Lords are even better fighters and can take even more damage before they are slain, but their greatest value is their inspirational leadership and the extra confidence they instil in others. Although the leadership bonus may seem quite small in relation to the value of a typical warrior (9 compared to 7 for a human warrior for example) this is a BIG difference in game terms, as you will quickly discover.