This part will be more understandable if you read the example story. The plot extends to include all the things that make the story work. Tim's deceitful ways are part of the plot. Dave's knowledge is part of the plot. Colin is part of the plot.
Plot is the most important part of a screenplay and is an integral part of the story.
You can write out the plot, or you can weave the tangled web in your head. But you should know the basic plot. When the characters are put in a situation, they are going to start working to get what they want. Complicate things by throwing in some obstacles, like Dave and Colin, and you have a story. Plotting a story can be a lot of fun.