Novice: What do you mean "inside the loop"

I am trying to figure out how to fix the more tag so that one of the widgets on the home page doesn’t display the whole article. But obviously more tag does work. So searching, I found that you are suppose to put this code “inside the loop” but have no clue what it is talking about or where exactly
the code: <?php
global $more;
$more = 0;
?>
//The code must be inserted ahead of the call to the content

<?php the_content(‘Continue Reading’); ?>

Thanks for your help