Coordinates are a means of numerical description for a location on the earths' surface. Geocaching uses coordinates of Latitude and Longitude (Lat/Lon) to describe the location of the cache or its intermediate waypoints.
For the purposes of geocaching, Lat/Lon coordinates are expressed in Degrees, Minutes, decimal minutes ( DDD°MM.mmm' ), but for purposes of general navigation (especially at sea) Lat/Lon is expressed in Degrees, Minutes and Seconds ( DDD°MM'SS" ).
An alternate system of coordinates is UTM, which is short for Universal Transverse Mercator. UTM would be a better system to use for geocaching, because it's more accurate and, being based on the metric system, it's better suited to terrestial applications. However, even though geocaching.com lists UTM as well as Lat/Lon, very few cachers or waypoint management programs seem to use it.