SSID stands for "service set identifier," and it is used to uniquely identify any given wireless network. You can think of it as the IP address for a wireless network. Every wireless network that's set up needs to be identifiable by other devices on the network and for the data packets that will along it. Often, various wireless networks overlap in the areas they cover; so if no wireless network was distinguishable from any other wireless network, trying to send information wirelessly would be chaotic at best and utterly dysfunctional at worst.
The SSID itself is a 32-character string (the characters can be anything a computer can type, such as a letter, number, symbol, punctuation mark, and even a blank space). A wireless network can be either hidden or broadcast. If the SSID is broadcast, then anyone can find that network and hop on. However, if the SSID is hidden, a user must know the exact SSID to jump on that wireless network.