iptables is the packet filtering system, aka firewall, for linux. Some sites to visit are
netfilter.org
http://iptablesrocks.org/
or just google "iptables guide" and you'll find plenty.
Packet filtering is basically saying:
(for ease of teaching, I'll assume 5 rules for INPUT and 5 for LOG)
All incoming data is subject to the 5 INPUT rules.
If it meets any certain rule, it is either accepted or dropped. If it meets none, you'll probably LOG it to find out what the heck it was.
If it goes to LOG, my rules which are about 5 long, just weed out the useless information about it that I don't care to know. They also format the log entry to look pretty.
I hope that helps a little