A content management system (CMS) is a computer application that allows publishing, editing and modifying content, organizing, deleting as well as maintenance from a central interface. Such systems of content management provide procedures to manage workflow in a collaborative environment.
So, with a CMS you can manage the content of your website. You can create new content and edit existing. Why is that so important? You don't want to edit the sourcecode of your site every time you want to change some text or image.
The basic principle
A CMS is mostly based on a database or a structured file, which does only contain the content. That way the content and the sourcecode are detached, so you can change one of both without affecting the other.
Most systems also come with a media management, so you can manage your images (or other files), add them to pages or even edit them directly.
Many systems can be extended by using plugins, so they can fulfill different individual requirements.
To enable teams to work an a site, most CMS contain a user management.
The different types
There are numerous CMS which differ more or less. There are systems using a database, there are systems using simple textfiles, there are systems you have to maintain on your own and there are hosted solutions.
The choice is yours and depends on your needs and technical skills. You shouldn't rush into your choice, think about it (there will be more on that topic soon).