Assets are products that have been sold to your customers. They are the physical products the customer owns which may or may not be serialized.
When an Opportunity is set to Closed/Won or a Sales Order is closed, the Move Products dialog box appears. You can then choose which products were sold at closing. Products that were moved to Assets will then display in the Assets tab from the Account Detail view.
Assets can also added manually by inserting them on the Assets tab of the Account Detail view.