RSS stands for Really Simple Syndication. It's a format that web sites and blogs can use to send updated headlines to you through services, such as My Yahoo!. My Yahoo! gathers the content you select from a variety of sources and displays it for you in one convenient location. Syndication means you don't have to visit each site individually to see what's new—you simply scan headlines or brief article summaries and click to read the full text. That's the really simple part.
If you know the feed URL, you can add it through the My Yahoo! UI. Some sites have a whole page of RSS feeds, and make it easy to add them to My Yahoo! using the + My Yahoo! button. An example of this is USA Today.