Social bookmarking is a way to mark your favorite places on the web from any computer, share your favorite places with your friends and visit the favorites of other people. I want to know the favorites of people much smarter than me!
The best part about it is tagging. In my favorites folder I can only put a site in one place unless I want to save it over and over again, but with tags you can "tag" the site with words that are associated with that site. Watch this video, it will help clear it up in your mind:
Once you have all of your favorites saved in del.icio.us, you can generate lists or tag clouds. A tag cloud is an awesome visual way to look the frequency of your tags and will help you be consistent in how you are sorting your favorites. If you look at someone else's tag cloud you will be able to instantly see if they have saved things you are interesting in.