Understanding concept of Spatial Reference System?

Following on from the answer given by @atlefren, an SRID usually is made of two components, an "authority" and an identifier. The authority is just the name of the organization that catalogues the identifiers. The most common authority you'll see is EPSG, which sands for the "European Petroleum Survey Group", and they have a comprehensive database of coordinate systems, datums, ellipsoids, projections, and so on, each with a code.

There are other authorities however, each with their own identifiers that may be different from, yet represent the same information, as an EPSG code. IGNF is one such authority supported by Quantum GIS for instance.

Wikipedia:

A Spatial Reference System Identifier (SRID) is a unique value used to unambiguously identify projected, unprojected, and local spatial coordinate system definitions.

In other words, a system of indentifiers for spatial reference system, so that i can tell a GIS application (like postGIS) that my data is in WGS84 Geographic coordinates by saying "EPSG:4326"

In Layman's Language, a spatial reference system describes how to convert spatial coordinates into real world locations.