A domain name is your own cyber-estate. This estate, just like its physical counterpart, has its value depending on its address (name) and its content. You can charge your visitors or give them a free tour, or run a side business as part of the estate.
Every domain name contains two or more components separated by periods, called "dots". The last part of our address, "com", is called the "top level domain". The second part of the domain, is what is called the "second-level domain". It is also possible to have sub-domains such as "subdomain.yourdomain.com".
Just like a 5th Avenue address is limited and also is more valuable than the vast majority of other addresses, the value of your domain-name can vary from a few dollars to -- well, some are going for a million dollars. We cannot tell you what furniture, art work, or side business to have on your cyber-estate, but your address would surely enhance the value of its content, or might actually destroy its value if the name doesn't attract clients.
On a technical level, it is an addressing construct used for identifying and locating computers on the Internet. Domain names provide a system of easy-to-remember Internet addresses, which can be translated by the Domain Name System (DNS) into the numeric addresses (Internet Protocol (IP)) numbers used by the network. A domain name is hierarchical and often conveys information about the type of entity using the domain name.
A domain name is simply a label that represents a domain, which is a subset of the total domain name space. Domain names at the same level of the hierarchy must be unique; for example there can be only one .com at the top level of the hierarchy, and only one domainname.com at the next level of the hierarchy.