Affiliate marketing is when you take a service or product found on the internet and promote it to someone else using a special link.
When a visitor reads your website, article, or blog, they click on your special link and are taken to a page on the internet where they can purchase the service or product you recommended.
Now, there are about a GAZILLION products and services to promote on the internet--from cell phones, to handbooks, to ebooks, to web hosting and beyond.
When someone uses your link to purchase a product or service you receive a certain percentage of the sale.
Obviously, the higher the cost of the product or service you recommend, the more money you make. In addition, some services like web hosting and membership sites sell monthly products. That means, if someone you recommend signs up for these services, you not only receive a commission on the first month, but EVERY MONTH AFTER THAT.