From Shopify Wiki

The handle is used to access an object in a Liquid template. It is by default the object's title in lowercase.
For instance, a page with the title "About Us" can be accessed in Liquid as pages.about-us

A product with the title "Shirt" would automatically get the handle shirt. If there is already a product with the handle shirt, the handle autoincrements, e.g. all following "Shirt" products would have the handles shirt-1, shirt-2, and so on.

Whitespaces in the original title are replaced by dashes in the handle: A title "My Shiny New Title" would result in a handle called my-shiny-new-title.

The handle will also determine the url of that object. The page with the handle about-us would have the url: http://yourshop.myshopify.com/pages/about-us

The handle does not update when you change an object's title. Shop designs often rely on a static handle of a page/product/linklist. Shopify does not automatically adjust handles so that changing your blogs title does not break the design. However, you can change an object's handle manually by clicking "handle" (right next to the title textfield) while editing that object.