I came across the Framework and References tab of my project and noticed that I can "Add New Reference..." to my project, what is this functionality?
References are used to pull additional libraries into your project. For example, when you're creating a Windows project, you'll be using Windows forms, XML parsers, socket libraries, and lots of other useful stuff. Now, you could create all these from scratch, but that would be an insane undertaking. Instead, you can use libraries which have been pre-built, such as System.Windows.Forms
(all the form stuff), System.Xml
(XML parser stuff) and others.
Down at the low level, these are all DLL files precompiled by Microsoft and distributed along with Visual Studio. Add Reference allows you to add new ones of these to your project, for example, Managed DirectX for 3D isn't something which is commonly used, so must be manually added to a project.
I've also just noticed the C++ tag on this, so this may actually sound very patronising (as I may have gotten the scope of the question wrong), in which case, I didn't mean it. For C++, it will be used for C++/CLI, which is Microsoft's attempt to allow C++ to use the .NET framework.