Permalinks are the permanent URLs of your individual blog post or page on your WordPress site. Permalinks are also referred to as pretty links. By default, WordPress URLs use the query string format which look something like this:
http://www.example.com/?p=233
However by going to Settings » Permalinks option page, you can modify the settings to change these query strings into human readable strings. Example:
http://www.example.com/2012/10/wordpress-for-beginners/
There are various different formats that you can use. Day and name, mon and name, numeric, post name, and other. Any format that is not the default one is SEO friendly. It just comes down to your preference after that.
