Domain names are what identify web pages. They can impact the amount of traffic that a website gets. Domain names play a major role in helping a website rank higher on search engines such as google and bing. This has a massive impact on the amount of traffic a website may get because a huge part of traffic comes from people finding a website on search results from a search engine.
Generic domain names help because when people search for the service google will rank the page with a domain that is close to it. For example if you are a plumbing business then owning plumber.co.uk would be huge and very valuable. However most generic names like this have already been registered and are very expensive to acquire.
However there are still generic domain names that are more than one word that can be acquired. These are known as long tail keyword domains. An example would be plumber-manchester.co.uk. Sometimes the long tail keyword domain names can actually be more effective as they are more specific so when someone types in their search on a search engine they may be more specific by typing what they are wanting but also typing in a location.
People don't always use search engines to find what they want either. Some will type it in the url bar and add .com to it or .co.uk or .net and just search so things like domains like restaurantliverpool.co.uk will get a lot of traffic that way. These generic domain names can just be used to redirect to the businesses site.