A plugin is a little add on to your website that adds an extra bit of functionality. WordPress is just a very basic set up on which to build your website. To actually get your website to do things you need plugins. Plugins tend to be created by other companies or web developers and can be downloaded and installed on your WordPress site.
This video shows you how to install a plugin and also how to add the WP Favs Plugin so that you can install all the plugins you need in one go.
WP Favs Quick Load Code: