An element is composed of millions of atoms and a compound is composed of molecules. When an atom reacts with another atom, a molecule is formed.
For example, if sodium reacts with chloride, it forms sodium chloride (Common salt). Here, sodium and chloride are elements and sodium chloride is a molecule. In this way, millions of atoms of sodium reacts with chloride and forms common salt.
Again, when the common salt is mixed with other compounds such as water, it forms a mixture.