An IP address is several numbers separated by dots (periods) and is how computers talk to each other. An IP address is like a street address in the real world and it’s the way a computer knows where to send the information when it needs to send information to another computer. IP addresses are limited in the number of combinations so they are adding extra numbers in the near future. Each website has an IP address and domain names are used because it is in a human language instead of trying to remember a lot of numbers.
Different countries are assigned different IP addresses. When you purchase a domain (website name), it will have a particular IP address. Your local internet provider also has a range of IP addresses and has assigned one of those to your account. You have internal IP addresses if you use a router.
For more information on IP addresses, see: http://en.wikipedia.org/wiki/IP_address.