One of the first things I learnt when I started was "always knit a tension swatch". You can ignore that, unless you are knitting something where tension and size matters - scarves are innocent, as are washcloths!
Here is a
lovely article all about guage.
A quick run-down of the basics:
On the yarn band itself, you can see what guage your knitting should be, with that particular yarn and with a certain size needle.
If you are knitting from a pattern, they will tell you the guage and which needles to use. Knitting at the same guage ensures that you are knitting the item exactly like the designer did, so you will use the correct amount of yarn and the sizes will be the same.
Before you start a pattern in which guage matters, you knit a tension swatch. The swatch is slightly bigger than the area you want to measure. Once you have knitted enough, you count your rows and stitches in the 4inx4in area. If it matches the recommended guage, great! If it is too tight, or too loose, you can either adjust your knitting technique (knitting more loosely or pulling it tighter), or you can change your needles up or down a size.
If you save all your tension swatches (squares) you can eventually sew them together to make something, like a hot water bottle cover or patchwork cushion or something.
Happy knitting, and show us what you make! I go gaga for photo's.