Knowledgebase
What are WordPress permalinks and how to use them
Permalinks are the permanent links to the posts, categories, etc. on your blog. The URL that you see in your browser for a particular post is also its permalink. All the permalinks to your blog have the same structure.
A default permalink to a post looks something like this: http://yourdomain.com/?p=16.
If you don't like this permalink structure, you can change it to something more meaningful and easier to use. In order to do that log in to your Dashboard and go to Settings>Permalinks. There you'll see several buttons (Day and Name, Month and Name, Numeric) giving you the chance to change the default structure and use what's called “pretty” permalinks. Next to each button you can see what the permalink structure will look like if you check that button.
Notice the tags that appear in the Custom Structure field when you check one of the other buttons, except for the Default button. When the Month and Name button is checked you'll see the following tags: /%year%/%monthnum%/%postname%/. If you want to create a custom permalink structure you can check the Custom Structure button and use such tags to do it. Never type a URL address in the Custom Structure field.
After you have chosen your permalink structure just click on Save Changes. Wordpress will automatically put the permalink rules in your Wordpress .htaccess file. If the file is not writable Wordpress will give you the rewrite rules which you can copy and paste in your .htaccess file manually. If you don't have such a file in your Wordpress root directory, Wordpress will try and create it automatically when you click on Save Changes, or you can do it before that yourself.
For some more detailed information read the WordPress permalinks tutorial.