I'm not sure if this document would help you:

http://www.perlfect.com/articles/chmod.shtml

In simple terms, a file (note that a directory is also a file) has both a user and group associated with it. When you "ls -l", you ought to see the username and groupname (or user id and group id on some systems). The 3 user bits apply to the user specified by this user id, the 3 group bits apply to anyone in the group specified, and for the others, the last 3 bits apply.