The basic idea of style sheets is to provide tools for specifying features of the visible (or audible) representation of HTML documents without introducing new HTML tags and attributes for the purpose. The presentation style is specified in a manner which allows several style specifications (by the author and by users, as well as browser defaults) to be taken into account when rendering a document. This will allow control over indentation, colors, fonts, etc in a sophisticated manner. For more information about style sheets in general, consult the W3C pages on style sheets and WDG pages on style sheets. There is also a CSS FAQ by The HTML Writers Guild. For criticism of style sheets, see my Why style sheets are harmful.
Almost at the same time as the HTML 3.2 Reference Specification was accepted as a W3C Recommendation, a recommendation with similar status was accepted concerning style sheets: Cascading Style Sheets, level 1, abbreviated CSS1. The two recommendations are, however, separate in the sense that the combination of style sheet specifications with HTML documents has not been defined exactly. In particular, CSS1 mentions the ID and CLASS attributes for selecting specific pieces of text, but these attributes are not in HTML 3.2. The same applies to attributes of STYLE element and the proposed SPAN element.
The HTML 3.2 language provides two ways of referring to style sheets in HTML documents:
Additional methods of referring to style sheets in HTML will probably be possible, and some of them are already supported. For a short general discussion, see Linking Style Sheets to HTML by WDG. There is also a W3C Working Draft HTML3 and Style Sheets which discusses these issues.
An HTML 3.2 conforming browser need not support style sheets in any way (except by recognizing the STYLE element and hiding its contents). However, there is increasing support for some features of CSS1 in browsers.