A .htaccess file is a granular configuration file for the Apache web server software, used to set or alter the server's configuration settings for the directory in which it is present, and/or its child directories.

WordPress uses an .htaccess file in conjunction with the mod_rewrite Apache module to produce permalinks.

Note that . htaccess is a hidden file in Unix/Linux (as dictated by the preceding period '.'), meaning it may not be visible using the default settings of some FTP clients.

Reference http://codex.wordpress.org/Glossary