A Milestone is a concrete achievement that I can accomplish. These are usually the easiest to pinpoint.
The Milestone Inbox is for accomplishable things I may want to do, but it's not clear what their priority is yet.
A Project is a higher level abstraction of that Milestone. What category of my life does the Milestone fall under? Anything that is a Project is a big life priority, so there aught to be Milestones for as many projects as possible.
A Next Step is the next step in accomplishing a Milestone.
Every new thing I want to get done goes into the Milestone Inbox, until it becomes a priority, in which case it gets moved to milestones, and is contained within a "Project." The next step to completing that milestone is placed in next steps. If I have a block of several hours to work, I plan out the first few, blocking off time for the next steps.
For organizational purposes, it sometimes helps to group todo lists and reference material together in a project file. This will have: