Chimota,
sounds like you are in dire need of a quick introduction into the COBOL language.
As i estimate, no short answer will do in response to your question; i'm going to give it a try, anyway.
Some points of interest may be these:
Every COBOL program source defines a section that is known as Working Storage. This is a map of a section of memory the program in question uses to store input from files, intermediate results, output to be written to files, etc.
The Working-Storage Section of any COBOL program defines a map for that program. Parts of that map can be hard coded in every program; however, is several programs manipulate e.g. the same file, it makes sense to define the layout for that file into a copybook. Each program can incorporate the exact same layout (= the copybook) in it's working storage by use of the COPY statement.
A Working-Storage definition follows strict rules; so will any copybook. Some of them are (using the example GreenGuy71 gave you):
The words are identifiers to give the program a reference to access a certain portion of memory, i.e. PKLR1-CONTRACT-NUMBER (12th line) defines a 10 byte section of alphameric data. The numbers at the beginning of each line are level numbers; the top level is identified by '01', every number beneath that defines a part of the '01'-level.
For instance, PKLR1-DETAIL-LOAN-RECORD' references the whole definition, since it is at 01-level; PKLR1-BASIC-SECTION is the only defintion at 10-level, and therefore superfluous; every 20-level listed in the example divides the 10-level (and therfore the 01-level) up into several bits that may be manipulated indivdually.
The 'PIC'-clause (PICture) defines the way the referenced bytes should be looked at. I.e. PIC X(10) means 10 bytes of alphameric content, PIC 9(02) means 2 bytes of numeric content, with each byte containing 1 digit, PIC S9(02) means the same, burt with a sign (= positive or negative). The adjective 'COMP-3' means that the numeric content should be stored in a specific format, where each nibble (=4 bits) holds 1 digit. This saves space in the memory occupied.
About spacing: every line in a COBOL program is devided up into 2 sections; area 'A', in the case of your copybook, runs froms position 7 up to 11; position 7 is reserved for comment characters, and the '01' level indicator should be in the positions from 8 to 11 (usually starting at 8). Every other bit should be in the 'B'-section, from position 12 up to the end of the line (usually 72). In section 'B'. spacing is mostly relevant for legibility, as long as each part of a line (that is, level nember, identifier name, 'PIC'-clause, picture, etc.) is at least seperated be a single space.
About value: the 'VALUE'-clause presets the defined memory area to a certain value. Normally, this is determined by the program while executing; however, it can be used to set the value for certain identifiers at the start of execution, either as an initial value, or as a value for a constant.
I hope this lengthy response gets you on the way and NOT confuses you even more !
Good luck !