Do not mix these words up!

As we have already seen on some examples german words can be pretty disorienting: Band, Nagel, Homonym.
Here is a new pair of words that you should not mix up: 

schwul - gay, homosexual
schwül - humid, sticky, muggy, oppressive (weather)

Do not let yourself be confused!

der Band (Bände) volume (book)
die Band (-s) (rock) band
das Band (Bänder) ribbon, tape; band, wavelength (radio)

Das, was er gerade gesagt hat, spricht Bände.
What he just said speaks volumes.
Die Band hat Live-Aufnahmen auf Tonband gemacht.
The band made live recordings on audio tape.

http://german.about.com/library/blconfuse.htm 

Those nails are really confusing!

der Nagel (die Nägel) - fingernail; nail, tack.

Nägel schneiden - to cut fingernails; an den Nägeln kauen - to bite nails
einen Nagel in etw. einschlagen- to drive a nail into sth

http://www.de-online.ru/forum/20-127-2

Homonym

A homonym is a word that is spelled the same (or almost the same), sounds the same as another word, but has a different meaning.
There are some homonyms in German. To distinguish between those words you should of course look after the context, they are used in. Another reference point is the article.

das Steuer (-) helm, tiller; controls (aviation); steering wheel

die Steuer (-n) tax

http://german.about.com/od/vocabulary/a/homofone.htm