* Solution: A solution is a homogeneous mixture where one substance (the solute) dissolves completely into another substance (the solvent). In this case, sugar (solute) dissolves into water (solvent), forming a clear, uniform mixture.

* Suspension: A suspension is a heterogeneous mixture where particles of one substance are dispersed throughout another, but they don't dissolve. These particles are larger than in a solution and can be seen with the naked eye. They also settle out over time. Think of sand in water.

* Colloid: A colloid is a heterogeneous mixture where particles are dispersed throughout a medium, but they are smaller than in a suspension. They don't settle out easily and can scatter light (Tyndall effect). Examples include milk and fog.

Key differences between solutions, suspensions, and colloids:

| Feature | Solution | Suspension | Colloid |

|-----------------|---------------------|----------------------|------------------------|

| Particle Size | Smallest | Largest | Intermediate |

| Appearance | Homogeneous | Heterogeneous | Heterogeneous |

| Settling | Doesn't settle | Settles out over time | Doesn't settle easily |

| Tyndall effect | Doesn't scatter light | Doesn't scatter light | Scatter light |

Therefore, because sugar dissolves completely in water, and the mixture is homogeneous, it forms a solution.