PageRank is an indicator of how connected with the rest of the web your webpage is. High PR sites are more likely to be found via random clicks on hyperlinks than low PR sites. It factors into ranking in Google but by no means is the be all and end all.
Its a nice anology to think of PR as a measure of flow around the web (PR 'juice') - high PR sites have lots of backlinks, although not all backlinks are equal. If for example a website had only one link from a PR10 site (not going to happen

) then they would have more PR than 100 links from PR4 sites. The PR10 site flows more 'juice' into a page. Nofollow tags interrupt the PR juice flow.
The PR scale is roughly logarithmic; eg. 100 PR10 sites, 1000 PR9 sites, 10,000 PR8 sites etc.