What is a species and how do new species develop

A species is living organisms and they develope by the climate a place or evolve vary chararistics for attracting mates 

Ok, in a branch of biology called Taxonomy, Scientists categorize organisms based on many different considerations.
 
For example: How many cells is the organism made up of? Type of movement? Are there organs or organ systems? Does the animal have a backbone or does it lack a backbone? Does it live in the water or does it fly?

There are many questions we can ask, and by answering those questions you will see that two organisms can be very distinctly different. 

Now getting back to your question, what is a species and how do new ones form?
A species is a group of organisms that are so similar that they can reproduce together. When animals reproduce, they exchange DNA and an animal of a specific species may have a new special characteristic that hasn't been seen before. If that animal is successful at passing off its genes, and its children are also successful then this is a new species. 

While on the other hand, a donkey and a horse two different species can have a mule. But that mule at maturity will not be able to reproduce. A mule is not a species.