The term Jews comes from the tribe of Judah - one of 12 tribes descended each from one of Jacob's 12 sons, that together make up the People of Israel ("Israel" was the name given to Jacob after his encounter with an angel in the desert). Jacob was the son of Isaac, who was the son of Abraham, who came to the land of Israel from Ur Kasdim (today within the territory of Iraq) according to God's commandment.
The reason for this distinction between the People of Israel and today's Jews is a reap in the Kingdom of Israel that happened when King David's son rebelled against his father and established his own kingdom, that attracted most of the people - this will be known from that point on as the Kingdom of Israel. Some tribes, among them the tribe of Judah to which David belonged, chose to stay with their King - this will be known as the Kingdom of Judea. The Bible goes on to describe the immorality of Israel's leaders, as opposed to the righteousness of Judea, from which came the people we know today as "Jews".