Both “du” and “Sie” mean “you”.
“Du” is the informal mode of address comparable to the French “tu.” Family members always say “du” to each other, children are always addressed with “du” until mid-adolescence and if people are close friends who are on a first name basis with each other, they also use “du”.
“Sie” is comparable to the French “vous.” People who work together usually call each other by their last names and use “Sie”, even after they have worked together for many years.
Germans distinguish between “Bekannte” (acquaintances) who are addressed with “Sie” and “Freunde” (close personal friends) who are addressed with “du”.
Young people tend to use the “du” form much quicker than older people.
When first meeting someone “Sie” is used and there is a formal process of offering the less formal address to the other person. Your age and gender determines who suggests to switch from “Sie” to “du”. It is up to the older person and/or the woman to offer this informal address to the younger person and/or male.
An adult is speaking to Thomas: Wo wohnst du, Thomas? (Where do you live, Thomas?)
Thomas is speaking to an adult: Wo wohnen Sie, Herr Schmidt? (Where do you live, Mr. Smith?)