hay - something exists
hay never changes form: no hayo, no hayes, always the same word. You use it when something is mentioned for the first time or stays unidentified: Hay un banco cerca. (There's a bank nearby - some bank.) Hay dos sillas en la cocina. (There are two chairs in the kitchen.)
After hay you usually find un/una/unos/unas, a number, or no articlearticleA short word placed before a noun that shows its gender and number, such as el or la. at all - but never the definite articlearticleA short word placed before a noun that shows its gender and number, such as el or la. el/la/los/las: Hay agua en la botella. (There's water in the bottle - no articlearticleA short word placed before a noun that shows its gender and number, such as el or la., because water here is uncountable.)
estar - where is something?
estar gives the location of a specific, already-known thing. That's why it's usually preceded by the definite articlearticleA short word placed before a noun that shows its gender and number, such as el or la., a possessive, or a name: El banco está cerca. (This particular, specific bank is nearby.) La mesa está al lado de la ventana. (The table - a specific one - is next to the window.)
estar is conjugated as usual; for talking about where things are, you mainly need está (he/she/it/you formal) here.
The switch: first hay, then estar
You often mention something with hay first and then describe it with estar - by then it's already known: Hay un supermercado cerca. Está al lado de la farmacia. (There's a supermarket nearby. It's next to the pharmacy.) This switch is exactly the core of the difference.
Questions work the same way: ¿Hay un supermercado cerca? asks whether one even exists. ¿Dónde está el supermercado? asks for the location of an already-known, specific supermarket.
Examples
- Hay un banco cerca.
- El banco está cerca.
- Hay una mesa en la cocina.
- La mesa está al lado de la ventana.
- ¿Hay un supermercado cerca? Sí, hay uno.
- ¿Dónde está el supermercado? Está al lado de la farmacia.