Parameterization

[Hanskanika]

Hello.. I am new to QTP. I am working in an automation project based on mainframe  I am little bit confused with the concept of parameterization. what is the use of  parameters tab in "Action properties" & parameters value in "Action call properties" ?  

please find below the code-

Code:

IdentifyInput="A"

RunAction "FormatForTenderAndConfirm",oneIteration,IdentifyInput

with the above two lines,I know we are sending a parameter to the action named FormatForTenderAndConfirm  and In that action we are writing the below code 

Code:

IdentifyInput=parameter("IdentifyInput")

Please explain in detail.