As I mentioned, Mac OS X, as a variety of Unix, labels each and every file and folder with a series of permissions. Leopard and Snow Leopard follow the POSIX standard, which specifies, among other things, a way to express permissions. Most other varieties of Unix also use POSIX permissions.
To begin at the simplest level, POSIX permissions include three main capabilities for any item: read (abbreviated r), write (abbreviated w), and execute (abbreviated x). Read, of course, means open a file and see what's inside. Write permission implies permission to modify or delete a file or folder. Execute permission means, in the case of a program, permission to run it — or, in the case of a folder, permission to list its contents.
Read, write, and execute permissions for a file or folder appear as a simple cluster of three characters, always in the same order: rwx. If all three characters are present, then a user has read, write, and execute permission. If any character is replaced with a hyphen (-), it means the user doesn't have that permission. So, r-x means permission to read and execute but not write; rw- means permission to read and write but not execute; r-- means permission to read but not write or execute.
In fact, you never see just one cluster of rwx characters; they always come in threes: rwxrwxrwx. Although r, w, and x always mean the same thing, they apply to different sets ...