To be simple, permalinks refer to URLs to go to your blog posts. These are extremely important! Precisely speaking, these permalinks will show how conveniently your posts show up in the search engines.
How do you set them?
You can set them up under the WordPress settings. You will see that your URL appears with a number. That is just not required! Thus, next you choose Custom structure and type /%postname%.html. That is it! Now, your permalink consists of your post name which can be easily searched for on Google, Yahoo and Bing.
How to create an intelligent URL?
Also, remember not to use too many keywords in your URL. Make a smart use of words by eliminating any unnecessary ones. Make sure that when you finalize a permalink, it is pleasant enough for a human being.