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Oh dear this question would yield a very lengthy answer... I highly suggest you look up "EV training guide" to get a better understanding.
The basic idea of it is fighting a certain Pokemon over and over to make certain stats higher than if you trained against many different Pokemon. It is indeed used competitively, to get the best Pokemon.
Yes. Like crobat said, you get these things called "effort value" points everytime you fight a pokemon. Fighting different pokemon gives you different kind of effort value points. For example, some EVs effect your attack, and some effect you HP. Once you get 4 EV points in 1 stat, it raised it by 1 point. You can get a total of 510 EV points. However you can't put them all into 1 stat. You can only put 255 in 1 stat. With this, you can manipulate how much stronger a certain stat gets. =w= Its vital to learn if ya wanna do competitive play.
We have a thread labeled EV/IV Discussion don't we?
Yeah we do. http://www.victoryroad.net/showthread.php?t=2437