Domain Names System - DNS
The Domain Name System (DNS) is a naming system for computers connected to the internet. The DNS associates domain names to information such as IP addresses of web servers hosting the domain as well as various other information.
As an example, when you request a file from "http://www.example.com", the DNS will have record of where that domain's files are stored and direct the request to that domain. This allows the use of "human-friendly" URL's instead of having to access domain names via IP addresses such as "12.345.67.89".
The actual specific workings of the domain name system are quite more complex than need be understood. If you think of it as a directory that associates business names (Domain names) to physical addresses (IP addresses) then you have the basic concept down.