A disk has two sides (a top and a bottom). Each side of the disk has tracks (concentric rings) on the surface. Each ring is divided into arc-shaped sectors, little units of storage space on the disk, usually 512 bytes on a floppy disk and up to several thousand bytes on a hard disk. Whatever the size, a sector is the smallest unit the computer can read or write at a time; it cannot deal with portions of a sector.
For instance, if the sectors on your hard disk can hold 1 kilobyte each (1,024 bytes) and you have a graphic that is 3.5 kilobytes, the computer will use 4 sectors to store that graphic, even though the fourth one is only half-full. Even though this wastes some space, it is exceedingly faster than if the computer had to write to each byte one at a time. The computer knows where the data is stored because it keeps track of exactly the track and exactly the sector within that track where data has been put, and keeps this information in a little directory on the edge of the disk.
If one of these sectors is physically damaged or flawed, like from dust or dirt, 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 it, unless you have the specialized hardware and software necessary for this sort of operation.