Activation : iPhone is in an inactive state when purchased. It will show a picture of a cable and the iTunes logo, and the text Slide for emergency in various languages is shown at the bottom. It's supposed to be activated in iTunes when Apple verify that you have signed up for a phone plan, but the method described in this tutorial will completely bypass this activation without involving Apple's checks.
Unlock SIM-lock: The iPhone is set up to only work with SIM-cards from the carrier you bought the phone with. If you insert any other SIM-card, you will get a message asking you to insert the correct SIM-card, and you will not get any signal. Unlocking the SIM-lock makes the phone work with any SIM-card.
Jailbreak: The file system on the phone is locked, meaning that you can not browse or change files and applications on the phone. You can't install new applications either, without using App Store. The process of jailbreaking the phone unlocks the file system, so that you have full control of all files and applications on the phone. While jailbreaking it's normal to install Cydia and Installer, to make it easier to install new applications. Cydia and Installer: These are two third party applications that works somewhat like App Store, with a major difference: Any applications and tweaks can be published here, without going through Apples extremely strict and limited official way of distributing applications. But be careful, these applications and tweaks are not always reliable, and may cause problems on your phone, or even make it stop working (following this tutorial from the start will fix it again).
Home and Power buttons: The round button at the front bottom of the phone is called the Home button. The button at the top is called the Power button.
Firmware: This is the software that contains the operating system on your phone.