Basically a ServletContext is used to maintain a state for a web application (non-specific user). Much in the same way a Session object is used to maintain state of a client on a server.
I would recommend looking at a book called Professional
Java Server Programming (ISBN 1-861002-77-7) for more information regarding where to specify, configure, initialize, access it, etc. It's an involved process but is very cool and worth while learning it if you're doing this type of programming.
Matt