It indicates how many notes and what kind of notes in a measure. The time signatures commonly used are 4/4 (common time) and 3/4. There is also 5/2, 6/8 etc. The number on top is the number of notes per measure while the number on the bottom indicates what kind of note. Here's a guide:
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bottom # is 1 = whole note
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bottom # is 2 = half note
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bottom # is 4 = quarter note
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bottom # is 6 = 8th note
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bottom # is 16 = 16th note