Without a domain name, websites are specified by an IP address. What is an IP address? It is an identifier that is used by computers or humans to determine the location of a server or website. However, for humans, an IP address, (which is expressed in a numerical format), can be difficult to remember. This is why domain names were invented. With a domain name, a human can locate a website through more user-friendly words or phrases. And although numbers can be a part of a domain name, they usually do not make up all of it, like what is seen with an IP address.
In terms of format, domain names have several parts. The first part is known as the URL, (which stands for Uniform Resource Locator). The URL tells the browser what the domain name is going to point to. This will usually be 'http', which means the browser can expect to locate a hypertext document. In layman's terms this means webpage. In the rare cases the URL is not 'http' it may be 'ftp', which means file transfer protocol. A webmaster would opt to use ftp if they would like visitors to download files from their server.
The second part of the domain name will be "www," which stands for "World Wide Web." This phrase lets computers and humans know the site the domain name is pointing to is indeed from the Internet. It is followed by the actual domain name, which can be a combination of letters, numbers or phrases. A good domain name will be short, memorable and most importantly, search-engine friendly. In fact, good webmasters tend to concentrate more on a domain name's effectiveness with SEO, (or Search Engine Optimization), than they do its creativity. To do this they make sure to choose a domain name that has a widely searched keyword.
The final portion of the domain name has what is known as an extension. This lets a person know a little bit more about a website's origins. For example, take .com, the most common domain name extension. It stands for 'commercial', and was originally intended for organizations in that vein. However, now the extension is used by virtually anyone looking to create a website. And this is for good reason, since most web surfers will think about the .com before they would think about .org, .biz or .net. Yet, don't think the other extensions can't become memorable either. Consider Wikipedia.org which is a wildly popular website despite its .org extension.
Domain name extensions can also specify things on a geographical level. An example are country-based extensions such as .fr, (which stands for France), or .jp, (which stands for Japan). They can also be state-based, such as .ca, (which stands for California). Both can serve as excellent tools for localized Internet marketing.
To get a domain name, a person can either: 1) get one from their web hosting company, provided they offer that service or 2) get one from a separate domain name company. Price-wise things will vary with both options, though typically the cost will range from $6.50 to $35.