Here is a good explanation (borrowed, not original with me)
Ed
Any bike suspension system has a mechanism to control the wheel's travel; it has a spring to push you back up after you've compressed it and it has a damper to absorb some of the bump's energy. Spring rate is the stiffness of the spring. Preload is a bit trickier. When you trap a coil spring in a fork or shock that holds the spring at a length shorter than the spring would be out in the open, the spring is "preloaded." The fork or shock won't start to compress until you push on it with a force greater than the preload force. Preload should be adjusted to get the right suspension sag. When you increase the air pressure in an air spring, you're changing both its spring rate and preload at the same time. You can't adjust them independently, as you can with a coil spring.
Damping can come from friction, from the energy losses inherent in elastomer springs or from air or oil flowing through orifices. Damping doesn't hold you up, or return you to your pre-bump position-it just resists movement. Compression damping works when the suspension is being compressed, and rebound damping works during suspension extension. The most powerful and tunable damping uses oil flowing through orifices. Sophisticated suspension systems use separate ports and valves for compression and rebound damping. Increasing compression damping will reduce bottoming , but it will increase transmission of harsh shocks through the suspension. Too little rebound damping and the bike will act like a pogo stick, harming control. Too much, and the bike will pump down over fast, repeated bumps, eventually bottoming out. You can change damping drastically by changing damper oil viscosity, or "weight." Five-weight oil is thin and gives light damping and a fast rebound. Fifteen-weight oil is thick and makes damping strong, bumps harsher and fork reaction slow. A heavier rider needs more damping than a lighter rider, but damping settings are a matter of personal preference.
Below are the five most commonly available fork and shock adjustments and what they do. ("fork" in the explanation below means "fork or shock"). To learn which knob is which on your particular fork, check out your owner's manual. Positive spring: coil or air - The positive spring resists the impacts taken by your fork and is what makes the fork extend to its original position after taking a hit. On a coil-sprung fork, the positive spring is usually adjusted by turning a knob on top of the fork leg. In air-sprung forks, the spring is adjusted by adding more air. You use a pump to change the pressure. If your spring is set too soft, your fork will sit far into its travel under your weight and will bottom out too easily. Too stiff, and it will give a harsh ride feel, and you won't take full advantage of the available travel. Negative spring: coil or air - A negative spring affects the top part of your fork's travel, working against the positive spring to make the fork more responsive to small impacts. At some point during your fork's travel, the negative spring's effect is minimized, making the suspension stiffen up to resist bottoming. Too much negative spring pressure will result in your fork sitting too far into its travel under your weight, and possibly bottoming out too easily. Too little negative spring pressure, and your fork will feel harsh over small bumps, and probably top out a bit too hard. Rebound damping - Rebound damping is the most common (and important) external damping adjustment. It controls how quickly your fork can extend after compressing. Too much rebound damping, and your fork won't return to its original position quickly enough to absorb impacts that come in quick succession. Too little, and it will come rocketing back after compressing and make for a tough-to-control ride. Low-speed compression damping - With this adjustment, you can affect your bike's ability to absorb small impacts. More low-speed compression damping makes for a less-compliant fork--it won't absorb small impacts as easily, but it won't dive as much from braking or bob as much when you're climbing. Less low-speed compression damping will make for a super-plush feel, but your fork will compress more under braking and bob more on climbs. High-speed compression damping - Completely closed off until they are needed, high-speed compression-damping valves will open to allow your fork to use more of its travel to absorb large impacts, thus preventing the fork from feeling harsh. Too much high-speed compression damping and your fork will feel harsh on medium-sized impacts. Too little, and your fork will move through more of its travel than necessary to absorb that same medium-sized hit.
And, as with all the other components on your bike, the fork needs regular maintenance. You need good clean seals. The best way to keep your seals good is to use fork boots. Dirt eats seals. When oil leaks out, dirt is probably leaking in. Some forks and shock can go for years without cleaning and maintenance, but most need help more often. Almost all forks are user-servicable, but most shocks aren’t.
