Pot equity is what percentage of the pot you currently "own" and thus expect to win on average if the hand was dealt out an infinte number of times. It is purely mathematical and has nothing to do with implied odds as another poster said.
Simple example: if there is a $100 pot and two players and you are a 70:30 favorite with two cards to go.... you have equity of 70% ($70), and your opponent has 30% equity ($30).
It's kind of confusing at first since you are either going to win the pot or you are not. But that's the idea.
Pokerstove works by dealing out (or simulating) every possible combination of unspecified board cards and calculates what percentage of the time you will win and adds in your share for ties as well.
Edit - Read this:
http://www.pokerstove.com/pokerstove/faq.php