What it means
A pipette is a tenth of a pip. On EUR/USD, one pip on a standard lot is worth about $10.
Example
EUR/USD from 1.0850 to 1.0875 is 25 pips: about $250 on one standard lot.
In practice
Pips are the common language for forex distances: stops, targets and spreads are all quoted in them. Multiply the stop distance in pips by the pip value of your position to get the money at risk.
Thinking in pips makes trades comparable across account sizes. A 30-pip stop with a 90-pip target is a 1:3 trade whether the position is a micro lot or ten standard lots.
What to watch for
A pip is not worth the same on every pair or position size, and yen pairs count pips at the second decimal place. Counting pips won says little about results; measure them in multiples of the risk taken.