As stated above, it's a unique ID given to each network card, kinda like IP addresses for Internet devices. It's how Ethernet tells different network devices apart. Let's say you're transferring a file on your LAN from a PC named Desktop to a PC named Laptop.
■Windows resolves Desktop to an IP address (say 192.168.1.100), and Laptop to an IP address (say 192.168.1.101).
■Windows takes a part of the file you're transferring, and encapsulates it in an IP packet (kinda like putting the data in an envelope) marked 192.168.1.100 as the sender, and 192.168.1.101 as the recipient.
■This IP packet is sent to the network card. The network card looks at the recipient IP address, and asks your LAN's DHCP server what MAC address that...