its the number of speakers..
2.1 - being stereo speakers,with 1 supwoofer,so it could just be stereo,with LFE effects from the sub,or indeed,it could be a virtual surround.
personally virtual never worked for me,it just doesnt sound the same as full surround.
5.1 - 1 centre speaker,1xfront left,1xfront right,and 2 rear speakers.
6.1 - same as 5.1,with the addition of 1xcentre rear speaker.
7.1 - same as 5.1,except,the differences being,there are 2 side speakers,almost side on with the listener,and 2 rear surround speakers.
heres a good place to look:
http://www.dolby.com/consumer/home_entertainment/roomlayout.html
the more speakers,the more immersive the surround effect,provided you have the hardware,and the material,to be used,like audio,dvd,SACD,HD-DVD,Blu-ray,etc.