An excellent explanation of how Mnemonic Seeds function by Andreas Antonopoulos. The mnemonic seed is used to create a universal seed or backup of your wallet and used by many wallet manufactures. It allows for a single seed (list of 12-24 common words from a defined list of 2048 words) to be used to restore access to your wallet if it is ever lost or defective. The use of hierarchical deterministic wallets allows for a single mnemonic seed to represent a near unlimited quantity of keys.
Here is a full list of all 2048 potential words that can be used in a Mnemonic Seed. The use of Mnemonic Seeds is covered in BIP39 (Bitcoin Improvement Proposal 39)