Parameterization is the technique using which we can execute a test plan multiple times with different set of data. This helps in creating load test script that closely simulated real-world scenarios where different users use different test data.
Suppose, we have to do load test of a search engine like google. First step will be to 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. For this we can use parameterization, wherein we can have a CSV file that contains 100 different search keywords. 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.