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Parameterization - Hanskanika - 11-20-2015

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.