A Subversion repository is the central, authoritative place where Subversion stores your files. You can create a repository on your own computer, set one up on a server of your own, or use a specialized Subversion hosting provider like Assembla to set up a ready-to-use online repository with a couple of clicks.
You will rarely modify your repository directly. Common usage is to checkout a working copy of your repository on your own computer, make changes there and from time to time commit the changes you want to keep to the repository.
Any collection of files and folders can be imported into a repository to manage them with Subversion. A repository does not only offer access to the current version of its contents, you can browse and checkout any previous revision that's stored in there too.
Normally, each project gets its own repository. So if you use Subversion both to develop an application and a website to market that application, both projects will likely have their own repository.