Unlike Adobe Illustrator and Flash, Photoshop is a pixel based image
editing application. As an example you can try draw a simple line in
Photoshop with your brush and zoom all in, or you can just open an
image. Now after you have zoomed in you see many small square blocks.
This is the pixels that your image is made of. A pixel can only contain
one color at a time.
So this means a picture is just made of different colored pixels that are combined.
When working with Photoshop it is important to know what your goal is
before starting your work. The more pixels per inch or ppi the more
details your picture is gonna have. You may also have seen it as
dpi which means dots per inch but it's still the same.
When creating a new document (CTRL + N) you get a window like the one
above. Before creating your document it's important to know what
kind of graphic you want to make.
Is it graphic for commercial print, news papers or for web.
These are the standards and what you should use when creating graphics
Commercial print is 300 ppi
Newspaper is 150 ppi
Web is 72 ppi
The more ppi the better quality but the larger file you get. This is
something you have to think about, specially when working with web based
images.
This is pretty much all you need to know when making a new document in Photoshop.
Draw a Pixel writes basic 
