Noob,
MIDI, or "Musical Instrument Digital Interface", is a protocol that transmits data from your source (keyboard, drum machine, etc.) to a sequencer, sound module, or both. MIDI doesn't carry any audio signal, but rather information about what note you played on your keyboard, when you played it in relation to the rest of the song, how hard you played and for how long, etc, etc.
You might check out midi.org for some basic information.
There's a lot you can do with a MIDI-capable keyboard and a sequencer. Think of a sequencer like an audio recorder for MIDI data. i.e. The sequencer doesn't actually record any audio, but it captures all of that lovely data about what notes you played on the keyboard (and how hard you played them and how long you held them and so on). Then, you can use the sequencer to play this information back to the sound module built into your keyboard, or to another outboard sound module. The sequencer is now providing the data, and the sound module plays the audio.
Then there's MMC, or MIDI Machine Control, which you will see mentioned in relation to most pro-level recording gear. The concept is the same... a source transmits instructions via a MIDI jack, but in the case of MMC, you're transmitting instructions about things like play / stop / mixer faders / pan / etc. instead of notes on a keyboard.
I use MIDI extensively in my project studio for both purposes. As a drummer, I can capture every note I play on a Roland V-Drums kit in my MIDI sequencer. During playback, the MIDI sequencer then "instructs" my V-Drum module to play back each note exactly as I played it before. This is useful in too many ways to count... let's say you didn't like the type of piano you chose when you recorded a take. With MIDI, you didn't actually record the audio from the keyboard, just the info about which note, when, and how hard. So... now when we play back the data from the MIDI sequencer, we can change the piano sample to, say... a bright piano... or a Rhodes piano... or... you get the idea.
