Seeding is the way that players are ranked for each tournament. It goes mainly on overall ranking e.g. the top 20 ranked players in any tournament will given numbers from one to twenty. However, it also occassionally goes (esp. at wimbledon) on how a player performs on a particular surface and their history at a particular tournament.
You want to be seeded as it helps you to avoid other seeded players in the early rounds of a tournament - a seed will generally play an unseeded player or a qualifier in the early rounds. Also, the top two seeds are generally placed on opposite sides of the draw - basically so that the organisers can get a top-notch final if at all possible. Therefore, seeds one and 3 will be on one side of the draw, seeds two and four on the other - in theory therefore the top four players should meet in the semi finals. This is why lleyton hewitt is not happy about being consistently seeded third at wimbledon, because he has to face fed-ex before the final.
This is what i understand seeding to be - could be completely wrong - please correct me if i am