It's effectively a line number.

In is an array of all of the inputs you have entered during a session, and Out is a dictionary of the results from the corresponding inputs. You can use these to reference previous inputs and results; for example:

 In[1]:  0x7b
Out[1]:  123

 In[2]:  0x1c8
Out[2]:  456

 In[3]:  Out[1] + Out[2]
Out[3]:  579

 In[4]:  In
Out[4]:  ['', '0x7b', '0x1c8', 'Out[1] + Out[2]', 'In']

 In[5]:  Out
Out[5]:  {1: 123,
          2: 456,
          3: 579,
          4: ['', '0x7b', '0x1c8', 'Out[1] + Out[2]', 'In', 'Out']}