Points are a way the lender makes some profit right now by lowering the interest rate by getting some money upfront. Approx 8 discount points will equal 1 % of interest rate. So if you saw a rate of 5% you could lower that rate to 4% if you payed 8 discount points to the lender to allow you to do it. Each point is 1% of the loan amount.
So if you have a 5% loan where you borrow $200,000
You could pay 2 points ($200,000 x 4%) = $4000 to lower the rate from 5% per year to 4.50% per year. The points basically give the lender some instant profit for lowering the loan interest rate.