There are dozens of teas found on your grocery store shelves, and different ways to describe these teas. The different types might baffle you a bit, so let's explain the terms. I got excited to tell you about the historic side as well, hope you find it interesting!
The most common form of tea you'll find is teabags, no matter where you go. These bags contain often the lowest degree teas that are called dust and fannings. Unfortunately this is the type that the Westerners have adopted as tea. This is a product that was born after a high pressure to produce a huge amount of teas, as the Europeans discovered and fell in love with tea during their China travels. The demand was rising exponentially. Often the teas' flavors were mildened and altered by the long travels from China to Europe so the black tea, having the most powerful flavors, became the Western world's favorite tea. Unfortunately the other amazing, but sensible Chinese teas such as green and white teas suffered by the trip's length and unfavorable conditions, and therefore remained to be discovered later on.
The Chinese tea was too expensive for the Westerners, and so the Englishmen decided to smuggle Chinese tea plants to their colony India and start making their own teas. The Indian work force was cheaper and the machines that were invented could create tea for fraction of the price for Chinese teas. These machines produced teas in a much faster pace, fitting the lifestyle of busy and unpatient Europeans.
As the black tea that they had received from China was of lesser quality and not that flavorful as intended, the Englishmen got used to using different additives with their teas, such as milk, sugar and honey. In India, they wanted to create something more robust, to have enough body and strength to taste the tea underneath all the milk and sweeteners. So they came up (thanks to industrial revolution) with CTC method. CTC is short for Crush, tear, curl and is really discriptive term for the method. The tea leaves are crushed, torn and curled into dust-like powder in order to create powerful aromas, that way extracting the flavors faster in the brewing process. The tea is pulverized so that the tea materia would fit in the tea bags. And because this tea was the lowest degree tea that was really powerful in taste, no one would complain that in this process the lesser grades of tea leaves were used. And that's how we got used to drinking the worst quality in the Western countries. And still we call it "tea", even though it couldn't be more further away from the real thing.
After the lowest degree, dust and fannings, come loose leaf tea. This can be all sorts of tea, the only thing is that it isn't packed in a bag. This can be dust-like leaf substance, this can be broken leaves and this can be whole leaves. So if the tea is classified as "loose leaf tea", that isn't necessarily a choice for the better.
The highest category is whole leaf tea (known as well as full leaf tea). This is the traditional way of processing tea leaves. This term is misused quite often, so be aware. Whole leaf teas are always unbroken and almost always handpicked as this method requires accuracy: the leaves are easily destroyed and this alters the flavor, making the sharp flavors come out and dampen the subtle, elegant flavors. In whole leaf tea you really can recognize the full leaves and buds.
Why are the whole leaf teas so much superior than others, you might ask. The flavor of the tea comes from the tea leaves as they slowly open and unfurl. Different flavor compounds appear at different times. The bad flavors appear last and in brewing your tea you need to know when to stop the brewing before these unwanted compounds break loose.
Whole leaves are seldom blended with other teas, so you can taste the real flavor of origin. This of course is the way we want to taste teas, because it is the origin (soil, climate, altitude, plant variety, picking style, part of the plant being plucked, processing method etc.) that makes the flavor in tea. It is always more expensive to produce, but it’s worth it!
Whole leaf teas won’t lose their flavors as fast and stays much fresher and more interesting, giving a really nuanced cup. Teabags become stale and dull quickly and they have issues with freshness. When you brew a teabag or broken leaves, the flavor compounds are transfered much faster to the cup creating uncontrolled brewing and most often over extraction, making the teas flavors straightforward without any nuances and bitter.