I have always thought about it like each face being its own individual person, so you can just assign information to them separately. In object mode (the container of all that information) things may look like a solid single thing, but all those faces that make up the whole object can be used for all sorts of trickery. One of them being assign a material per each face. The other shave given technical answer, but I always like to think of stuff in metaphors, so the faces I think of as dudes with different t-shirts and each t-shirt of different colors and you can take on and off the t-shirt for other colored t-shirts. Kind crazy.
