A disk has two sides (a top and a bottom). Each side of the disk has tracks or concentric rings on the surface. Each ring is divided like a pie into equal wedges, or sectors, which are the smallest units of storage space on the disk. If one of these units is damaged or flawed, it is considered a bad sector and cannot be used.
If there was already data in that sector when it got damaged, chances are slim that you can recover that data unless you have the specialized hardware and software necessary for that sort of operation. Almost all hard disks are born with bad sectors, so don't freak out if your software utility reports them. Other bad sectors should not start appearing, though, after you start using the disk.