The term IP is an acronym for Internet Protocol, the core protocols used throughout the Internet. Each computer on the Internet is assigned a unique number with which it can be addressed and data sent to it. These addresses are 32 bits wide; allowing values between 0 and 4,294,967,295. In the interest of sanity the convention is to break these addresses into 4 (8 bit) chunks.
There's more hiding in the address than a random number. Netmasks also play a role in identifying computers on the Internet.