Hi Snow,
You are correct that megapixels relate to the resolution of an image. The more megapixels a digital camera has, the higher the image resolution.
Higher resolution cameras offer two main advantages: 1) you can print larger photos and, 2) you can crop more without image quality degrading and looking "pixellated."
Be aware that megapixel count is only one aspect which effects the quality of images. Lens quality and sensor size play important roles too.
In deciding how many megapixels your digital camera should have, it's important to consider your printing needs. For example, if you never print an image larger than 5x7" you may require only three megapixels (but do keep your future needs in mind). I have a 5 megapixel camera and it comes in handy because, even though I rarely make prints larger than 4x6," I edit photos and crop a lot prior to printing.
There is a lot to learn about this and related subjects. We've tried to make the information as simple to understand as possible. Here are links which should help your understanding.
What is a megapixel?http://www.digicamhelp.com/what-is-a-megapixel/index.htmResolution and print size:http://www.digicamhelp.com/working-with-digital-images/printing-resolution.htmImage Quality and Compression:http://www.digicamhelp.com/taking-pictures/image_quality.htmIf you have further questions, let us know.