Wow, really? I can see not knowing what DRM is, but Steam, too?
You guessed right on DRM. It stands for "Digital Rights Management". And it's a way for copyright holders to curb the tidal wave of rights violations that take place every day. An imperfect solution to a huge problem. The most restrictive version requires even single player games to be online all the time, to verify the authenticity of the game, but 2K hasn't used that yet, to the best of my knowledge.
Steam is simply an amazing resource for PC gamers. I was a late adopter myself, but now I'm hooked. Mainly because I can't resist a good sale, and I've picked up dozens of big titles for 75-90% off during their regular discount events. The Steam service was created by Valve, a game company (Half-Life). The biggest draw for me is that your games are tied to a user, not to a machine. So when I travel, I can log into my Steam account at a friend's place, download any of the games in my library, and start playing. My login is required, though, so my buddy can't play after I leave.