These terms are for describing sailing while on land or talking on the boat. The true wind direction is key in definning these terms.
when you first get out on the water in clear air you are supposed to head directly into the wind and get a compass reading of true wind. this way you can keep track of the shifts, if any, whilst sailing.
the fine points of these terms are important in setting a good race course.
in general a hobie 16 is always reaching except for d.d.w.
a fast cat in good wind nearly always has the apparent wind forward, so apparent wind couldn't possibly tell you what point of sail you are on according to the compass.