Stands for "Input/Output" and is pronounced simply "eye-oh." Computers are based on the fundamental idea that every input results in an output. For example, if you are running a word processor program and type a sentence on your keyboard, the text will appear on the screen. The keyboard is an input device and the screen is an output device. You might also print the text using a printer, which is another output device. The computer's CPU handles all the I/O operations, sending the data it receives to the correct path. The path may be to the video card, to the hard drive, or to the RAM, just to name a few.
The ports on the outside of a computer are commonly referred to as "I/O ports" because they are what connect input and output devices to the computer. Software developers use I/O to describe how a program will function, depending on what a user enters. For example, if the user presses the space bar key in a game, say "Super Jumper Man," the character on the screen will jump. Multiply that by several thousand other scenarios of user input and you have yourself a computer game.