This is probably a dumb question but what's a referral?

Its if u tell anybody too come here.......Lets say............I was talkin to u on msn........and u didnt register here yet........and i tell u too register here..........................so u come here and u start registerin.........and theres a thing that says..........Who told u too come here?,,,,,,,,,,,,,,and then u put my name there............................thats a referral