Every time someone bets, they are offering you a price. Pot odds are how you decide whether that price is worth paying. It is the single most useful number in no-limit hold'em, and it is just one comparison: the price you are being offered versus how often you need to win.

The price the pot is offering

Pot odds are the ratio of what you must call to the total you would win.

Say the pot is $80 and your opponent bets $20. You must call $20 to win the $100 that is now out there (the $80 pot plus their $20 bet). You are risking 20 to win 100, so you are getting 5-to-1. Turn that into a percentage (the share of the time you need to win to break even) like this:

break-even % = call ÷ (pot + call) = 20 ÷ 120 ≈ 17%

If you win more than 17% of the time, calling makes money. Less, and you are lighting chips on fire. That is the whole idea.

Comparing price to your chance of winning

The price only means something next to your actual chance of winning the hand: your equity — roughly, your probability of winning — which is covered in depth in its own lesson. The rule is simple:

Equity greater than the break-even % → calling is profitable.
Equity less than the break-even % → folding is better.