Some keyboards have a number pad: that’s a block of number keys arranged in a grid. If you’re typing a lot of numbers, using these is much more convenient than the row of number keys above the letters.
Because the number pad keys are arranged in a grid, it’s also a useful layout for the arrow keys.
The number lock key lets you switch the number pad’s keys’ behaviour between those two modes. Press it to toggle between numbers (num lock on) or arrows (num lock off).