Master Pages are actually an ASP.NET 2.0 technology. They allow you to create a page with a number of ‘placeholders’ (there are a lot of these). Below is a view of the default.master page for a team site.
You can see that the master page already has controls for navigation, search, site actions, etc. built in. I’ve also selected one of the placeholders – PlaceHolderTitleBreadcrumb. These placeholders give locations on the page for other .aspx pages to put content into. For example, the default.aspx page for a Team site puts content into the PlaceHolderMain and PlaceHolderTitleBreadcrumb placeholders, amongst others – we’ll look at this below. Now, the observant of you will notice that the PlaceHolderTitleBreadcrumb placeholder shown above already has content – the breadcrumb to the page’s location. A placeholder can define default content, but the page that then uses the master page can override it, and put it’s own content in. For example, in our master page the PlaceholderMain has no content, but this will almost always be overridden.
Master pages normally exist in a Master Page gallery, which is hidden from normal users. You might have many master pages, though you normally only use 1 on each site. By changing the master page you’re using you can make major changes to the layout, look and format of your site.