Points are awarded to users based on activity on the site. The current set up is like so:
Post a comment, Value: 1 pts
Post a blog, Value: 10 pts
Signup, Value: 1pts
Be a member for 5 days, Value: 50pts
Be a member for a month, Value: 100pts
Be a member for a year, Value: 500pts
Have 5 friends, Value: 50pts
Have 15 friends, Value 100pts
Have 50 friends, 500pts
You can view your points history by clicking on your points total in the dashboard, or on your profile.
Now what do they mean? In the near future items will be made available for purchase with these points, Some of these items could be physical, or digital. I can't say yet what these things might be but they will be awesome! We have some improvements in the works for the points system like rewarding a blogger for creating a popular blog with other users (based on original comments), or starting a thread in the forums that gets a certain amount of replies.
When you spend points your visible total will remain the same (as other users see it), but your available points to spend will decrease, you can view your spending history on the same pages mentioned above.