Hops are generally divided into two categories: bittering and aroma. The hops are added to the wort during the boil stage where the flavour compounds are extracted into the wort.
Bittering hops such as Target, Chinook & Northdown deliver a high degree of bitterness to the beer during the boil. The bittering hops get their flavour from alpha acids which are converted from less water soluble molecules to more water soluble molecules by the boil - a process called isomerisation. The alpha acid strength is often given as a percentage - the higher the percentage, the more bitterness.
Aroma hops deliver a more fragrant flavour to the beer and are added towards the end of the boil or even straight into the cask - known as dry hopping. Goldings, Saaz & Liberty are examples of these. The aroma hop flavours are more volatile than the bitterness flavour compounds and are driven off from the wort by prolonged boiling. This is why they are added towards the end of the boil.
The two categories are an artificial distinction as the aroma hops contain low amounts of bittering compounds and the bittering hops contain aroma compounds. All hop varieties are on a sliding scale from bitterness to aroma types. Several varieties fall in the middle such as Fuggle, Amarillo & Cascade, with a moderate amount of bitterness & aroma compounds. As the aroma compounds generally escape from the wort during boiling, it is often the practise to use two different hops to make a beer: one to add bitterness and one added to the boil later to give aroma qualities.