We were all novices once - you will quickly learn to distinguish "row"
and "column" properly.

The first A1 refers to the cell in the second sheet into which you type
the item number you are interested in.

The second A1 is part of the range A1:B20 in Sheet1, and this refers to
the block of cells starting with A1 and going to B20 (i.e. 2 columns
wide and 20 rows deep). I have assumed that your item numbers and
prices occupy this block of cells, so if it was longer (say, 50 rows)
you would refer to this as A1:B50. Two or more columns like this are
refered to as a table - this is your lookup table.

The number 2 indicates which column in the table the value should be
returned from. You may have wider tables with more columns, so changing
this parameter would enable you to fetch data from a different place in
another situation.

The 0 at the end means that you want an exact match.

Hope this helps your understanding.

Pete