SKU stands for Stock Keeping Unit. You can set up unique serial numbers for your products which would be handy in stock keeping. You can leave SKU blank if you don't need to use it. For example:
After uploading your product you can type in your SKU under "Quantity and Price" tab
Here we use ABC001 as product SKU
If the product has different variations, such as S, M, L and XL etc.
The SKU can be ABC001-S, ABC001-M, ABC001-L and ABC001-XL correspondingly.