Hume draws a distinction between impressions and thoughts or ideas (for the sake of consistency, we will refer only to "ideas" from here on). Impressions are lively and vivid perceptions, while ideas are drawn from memory or the imagination and are thus less lively and vivid. Impressions comprehend, according to Hume, "all our more lively perceptions, when we hear, or see, or feel, or love, or hate, or desire, or will." Thus, both the color red and the feeling of anger are considered impressions. Ideas are what arise when we reflect upon our impressions, so the memory of seeing the color red or a thought about anger are considered ideas.
While we might consider the human mind an unlimited organ, able to conceive of imaginary creatures and far-off lands with great facility, Hume points out that our imagination in fact consists merely of a complex of ideas. For instance, if we imagine a gold mountain, we are compounding our idea of gold with our idea of a mountain. Hume provides two arguments to support this claim. First, he suggests that all complex ideas are compounded out of simple ideas, which are in turn derived from simple impressions. For instance, our idea of God as supremely good and intelligent comes from taking our simple ideas of human goodness and intelligence and augmenting them without limit. Second, he points out that our imagination is limited to those ideas of which we have had impressions. Thus, a blind man is unable to imagine colors, a deaf man to imagine sounds, or a mild-mannered man to imagine cruelty.
Hume admits one objection to his distinction. He points out that I can imagine certain colors without ever having perceived them. For instance, if I have seen several shades of blue, I might be able to imagine some other shade of blue that falls between them. Though he has no answer to this objection, he remarks that the counter-example is so singular that is does not upset his general maxim.
This distinction between impressions and ideas is valuable for clearing up our philosophical vocabulary. While ideas are faint, obscure, and easily confounded with other ideas, impressions are vivid and clearly defined, and we are not likely to fall into error with respect to them. Thus, when we find ourselves discussing a philosophical term that we suspect may not refer to any idea, we may simply ask from what impression its supposed idea might be derived. Since all ideas are derived from impressions, a term that is not connected to any impression is meaningless.
In a footnote, Hume notes that his distinction between impressions and ideas clears up some confusions found in Locke's rejection of innate ideas. Hume complains that Locke fails to clarify what he means either by "innate" or "idea." In Hume's vocabulary, we could assert that impressions are innate and ideas are not.
In section III, Hume discusses the connections that exist between ideas, asserting that all ideas are linked to other ideas. Hume lays out three principles by which ideas might be associated: resemblance (where a picture of a tree might make us think of the tree), contiguity in time or place (where mention of one apartment might lead us to discuss others), and cause and effect (where the thought of a wound makes us think of the pain that follows from it). Hume admits that he has no reason for laying out only these three principles except that he cannot think of any others that would be needed. For instance, association by means of contrast or contrariety can be seen as a combination of resemblance and causation.