A lib is a library, they can be included into your game to make it better/easier to do things. For example, if you included Deadron's Character Handling into your game it will automatically save and load characters. Or if you use my Alternate Movement library (couldnt resist some advertising) you will have allow your players to drag there character around via the mouse.
Most Libs need you to have a proc to do something, for example S_Smileys by Spuzzum. To use it you would do something like this:


They usually contain a help file or some advice at the top of the files to show you how to work it best.
:)