Too Long; Didn't Read
The iCalendar specification (as in RFC 5545, not to be confused with good ol’ iCal, now known as Apple’s Calendar app) is a “data format for representing and exchanging calendaring and scheduling information such as events, to-dos, journal entries, and free/busy information, independent of any particular calendar service or protocol.”
Basically, it’s a list of rules about how to describe events in computer-friendly language, and if you follow those rules, users can import your events consistently in whatever various calendaring programs they might be using. Glancing through the specification, you’ll see it talks about how to specify all kinds of features you may have seen in various calendaring apps, such as:
Specify a location
Specify a time zone
Repeat an event with a certain frequency
Note whether someone’s an optional or required attendee
Denote whether it shows up as busy or free time on someone’s calendar
Send an alert a few minutes before an event happens