A blockchain is, in its simplest form, a digital ledger that records transactions. It's similar to the ledgers we use for hundreds of years to track sales and purchases. This is the basic idea behind blockchain is in who holds it and who verifies transactions. Blockchains are unique in that they are completely decentralized. Blockchains are not managed by a central clearinghouse like banks.
There is also no central ledger. Instead, the ledger is spread across many computers called nodes. Each node has a copy on its own hard drive of the complete ledger. The software known as a peer-to-peer client (P2P) connects these nodes together.
This allows data to be synchronized across the network and ensures that everyone has the same version at all times. You can read more about blockchain at https://www.supercolony.net/ for a better understanding of the technology.
A blockchain is used to store a transaction. It is encrypted first using the most advanced cryptographic technology. Once the transaction has been encrypted, it is transformed into a block. This is the term for an encrypted group of transactions.
The block is sent (or broadcasted) to the network of computer nodes. Once verified, it is passed on through the network so that the block can become part of the ledger. This is known as the chain and is why the tech is called a blockchain.
The transaction can be finalized once it has been approved and entered into the ledger. This is how cryptocurrencies such as Bitcoin work.