Parameterization is process of generalizing some user input, so as to use it for multiple users or iterations. Suppose, we have to do load test of a search engine, for that we record the search scenario. Now to do effective load test, we can't just playback the script for say 100 users. We should simulate 100 users that search for 100 different things. Here we need parameterization, wherein we can have a CSV file that contains 100 different items. Now instead of the static search item that we had recorded in our script we can include the search items from the CSV file dynamically.
Now on running the load test, for more than 1 user or for more than 1 iterations, at each execution a new value will be fetched from the CSV file (this can be verified from the "View Result Tree" listener). This was all about parameterization.