In CreateNewJTextField:
this.getContentPane().setLayout(new FlowLayout());
This create a Pane and sets a default layout. Pane is like a piece of paper on which you draw.
JTextField field3 = new JTextField(10);
add(field3);
This creates a text field and adds it to that pane.
In createAndShowGUI, you are adding this pane to a JFrame(the frame with minimize, close buttons), which is like a drawing board.
frame.setVisible(true);
frame.setDefaultCloseOperation(JFrame.EXIT_ON_CLOSE);
Then you set the visibility of the frame, define what should happen on clicking close button.