Combinational logic implements Boolean functions, which are functions of input only. In other words, for any input, the output is fixed. If the input is 000 and the output for that circuit is 10, then the output will always be 10 for an input of 000. If you were to write a function for a combinational circuit, you would only be allowed to use inputs in writing the function; you would not be able to use any other control variables.
Imagine a Coke machine. If you submit three quarters to the machine, or 75 cents, you will get one Coke. This may seem like a combinational function; after all, you have submitted an input, three quarters, and received a single output. In one sense, then, the Coke machine maps inputs to outputs. Notice, however, that you actually gave the Coke machine three inputs, one for each quarter. The fact that the machine responded differently to the first two inputs inputs than it did to the third input suggests the machine is not a combinational function.
The key to understanding the Coke machine is the concept of states. Rather than responding to each input in the same way, the Coke machine responds to states, which are combinations of input information and information stored by the machine. In this example, the Coke machine stores information about the number of quarters you have entered and only dispenses a Coke for each 3 quarters. In other words, it only gives out a Coke when the state is 3.
Unlike combinational circuits, sequential circuits have memory and respond to states rather that just inputs. The way that sequential circuits respond to state changes is through flip-flops, which store a number representing the state of the circuit. These flip flops create a feedback loop until the state is such that an output is produced. This feedback loop is what separates sequential from combinational logic.