I think for the time being we can explain it in a few ways to them. Like it working like a database. Steem is the database and Steemit is just one of a few sites that displays the data from Steem.
We can come up with quite a few analogies for this for them.
Most people don't just "get" things at first glance...especially when the person explaining it to them doesn't really get it either.
I agree with you, we ned to try to explain Steem/Steemit in layman's terms!