The difference of 7 and 7/8 and 3 1/4 can be restated as the difference between 63/8 and 13/4. This is just a change from mixed numbers to improper fractions.
We must now get a common denominator (the bottom part of a fraction). To get 8, we must multiply by 2 to the denominator of 13/4. Since we want this number to stay in the same value, we have to multiply the numerator by 2 as well (top part of the fraction). Therefore, we are getting the difference of 63/8 and 26/8. Doing this, we get (63-26)/8, so the answer is 37/8 = 4 5/8