Every operating system needs a mechanism to associate documents with the applications that created them. When you double-click a Microsoft Word document icon, for example, it's clear that you want Microsoft Word to launch and open the document.
In Windows, most documents bear a three-letter file name suffix. If you double-click something called memo.doc, it opens in Microsoft Word. If you double-click memo.wri, it opens in Microsoft Write, and so on.
Mac OS 9 uses a similar system, except that you never see the identifying codes. Instead, it relies on invisible, four-letter creator codes and type codes. Apple carefully monitors and tracks these four-letter codes, in conjunction with the various Mac software companies, so that no two creator codes are alike.
As a Macintosh/Unix hybrid, Mac OS X uses both creator codes (like Mac OS 9) and file name suffixes (like Windows).
It's possible to live a long and happy life without knowing anything about these codes and suffixes. Indeed, the vast majority of Mac fans may never even encounter them.