Britain is covered by 100 kilometre grid squares. Each of these squares is allocated a two-letter code. The Isles of Scilly are in SV, West Cornwall in SW, East Cornwall in SX and North East Cornwall in SS.

The 100 kilometre grid squares are further divided into vertical and horizontal lines at 10 km intervals creating 10 kilometre grid squares. The picture below shows four of the 10 kilometre squares in the far west of Cornwall.

Each 10 kilometre square is again divided into 1 km intervals creating 1 kilometre grid squares.
Any intersection between a horizontal and vertical line is read as the number of kilometres east of the southwest corner, which is called the "easting" and the number of kilometres north of the southwest corner, which is called the "northing". To remember this, think "along the corridor and up the stairs".
The standard format for a grid reference is - [two grid letters] [three figures (easting)] [three figures (northing)].
The picture below shows the 1 km intervals within SW43. The 1 km square grid reference for the red dot is SW4434.

To get an even more accurate grid reference, the 1 km grid squares can be divided up into 100 metre grid squares.

Therefore, the grid reference for the red dot below is SW445345. It is 500 metres east from the southwest corner SW4434, and 500 metres north from the same corner.