permalink is permanent link, it is link that is readable by human. this permalink is used to make it easier for us to read a link and use the link when we want to cite the link. permalink also useful for increase the traffic of your blog. this link usually is generated by rewrite engine. http://en.wikipedia.org/wiki/Rewrite_engine

if you want to edit permalink in you wordpress you can edit it in menu setting > permalink. first you need to go to the dashboard and click the setting icon which is located in right side in the bottom. and choose permalink for example

after you choose the setting you want, you need to remember it, to make you easier if you want to move or create new wordpress installation using you old post/database.