Each file and directory has permissions associated with it. Those permissions are made up of three groups of three characters: rwx rwx rwx (read, write and execute). The first group represents the owner permissions on the file, the second group represents the group permissions on the file, and the third group represents the world permissions on the file.
The owner is the user owning the file.
Each user has an internal user number (UID), and an internal group number (GID), set by the system administrator. Everyone with the same group number is said to be in the same group. Group permissions apply to everyone else with the same group number.
world is everyone else.
For example, the file phone.numbers may have permissions set as rwxrwxr-. This would mean that the owner of the file can read the file, write to it, and execute it. People in his/her group have the same privileges. Everyone else can only read the file; they cannot change, or execute it.
The permissions of a file/directory can be changed with the chmod command.