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How is specific gravity related to beer?

Specific gravity is a measure of the density of a liquid. Distilled water has a specific gravity of 1.000 at 15 °C and is used as a baseline. The specific gravity of beer measured before fermentation is called its Original Gravity (OG), which is sometimes referred to as Starting Gravity (SG). This gives an idea of how much sugar is dissolved in the wort (unfermented beer) on which the yeast can act. The range of values could be between 1.020 and 1.160, meaning the wort can be from 1.02 to 1.16 times as dense as water. When measured after fermentation, it is called the Final Gravity (FG) or Terminal Gravity (TG). The difference between these two values is a good index of the amount of alcohol produced during fermentation.

The OG will always be higher than the FG for two reasons. Firstly, the yeast will have processed much of the sugar that was present, thus, reducing the gravity, and secondly, the alcohol produced by fermentation is less dense than water, further reducing the gravity. The OG has a significant effect on the taste of the final product. A high OG usually results in beer with more body and sweetness than a lower OG. This is because some of the sugars measured in the OG are not fermentable by the yeast and will remain after fermentation.

Here are some rough guidelines on typical OG values:

Some “Bitters”, “Milds”, wheat beers, and most "Lite" beers have an OG ranging from 1020-1040. The majority of beers including most lagers, stout, porter, pale ale, bitters, and wheat beers fall in the 1040-1050 range. Oktoberfest, India Pale Ale, ESB (Extra Special Bitter) fall in the 1050-1060 range. In the 1060-1075 range are bock, strong ales, Belgian doubles, etc. Above 1075 are the really strong beers like dopplebocks, barleywines, Imperial Stouts, and Belgian “trippels” and strong ales.

Source : FAQ of alt.drinks.beer