When you have to make a collection of objects...that is when you have to pick up things...you use combination.
When you have to arrange a collection of objects...you use permutations. permutation is within a combination...i.e. on a collection of collection of objects.
You have 26 alphabets in english. No. of ways to pick 10 alphabets out of 26=C(26,10)...this will be the total no. of different collections of 10 objects out of 26.
For each of these collection, we can arrange the 10 alphabets to form words in 10! ways.