It is important to understand how your digital camera records light, so that you can better control how the image is captured.
(*image from http://www.nikonians.org/html/resources/guides/digital/histogram_101/)
The histogram basically is a graph that represents the maximum range of light values your camera can capture, in 256 steps. (0 = Pure Black, and 255 = Pure White) In the middle of the histogram are the mid-range values that represent middle colors like grays, light browns, and greens. The values from just above zero and just below 255 contain detail.
The actual histogram graph looks like a mountain peak, or a series of peaks. The more of a particular color, the taller the peak. In some cases the graph will be rounder on top, or flattened. The left side of the histogram represents the maximum dark values that your camera can record.
So, basically, the histogram's left to right directions are related to the darkness and lightness of the image, while the up and down directions of the histogram (valleys and peaks) have to do with color information.