Your inventory is a catalog of products and should be thought of as your central inventory or warehouse. With Trunk, the goal is to be able to manage your inventory from one place. In other words, it's a combination of all your sales channels.
Your listings are a representation of what you have listed on your sales channels (i.e. Etsy). Listings will always reflect the latest information on the actual sales channel no matter what change has been made to them. You can always look at the listings view to check if Trunk is keeping each of them up-to-date.