A GPS unit is a electronic device that can determine your approximate location (within around 6-20 feet) on the planet. Coordinates are normally given in Latitude and Longitude. You can use the unit to navigate from your current location to another location. Some units have their own maps, built-in electronic compasses, and voice navigation, depending on the complexity of the device.
You don't need to know all the technical mumbo-jumbo about GPS units to play Geocaching. All you need to do is be able to enter what is called a "waypoint" where the geocache is hidden.