Last Known Good Configuration, or LKGC for short, is a way in which you can start Windows 7 if you're having trouble starting it normally. Last Known Good Configuration loads the drivers and registry data that worked the last time you successfully started and then shut down Windows 7.
To start Windows 7 using Last Known Good Configuration, press the F8 key just as, or just before, the Windows 7 splash screen starts to load. This will load the Advanced Boot Options menu.
Tip: It's really easy to miss the small window of opportunity to press F8. If you see the Windows 7 animation begin, it's too late. If you don't press F8 in time, wait until the Windows 7 login screen appears and restart the computer from there. Do not login. If you do, and then shut down Windows 7, you'll lose any benefit of using LKGC.
Important: The biggest caveat with Last Known Good Configuration is that it's only valuable if Windows 7 was working as you'd expect the last time you properly shut it down. So if you've started Windows 7, tried to troubleshoot a problem, and then shut it down again with the problem uncorrected, Last Known Good Configuration won't help. So the most important advice I can give is to use LKGC as one of the very first troubleshooting steps for driver problems and issues like Blue Screens of Death.
Not a Windows 7 User?
See How Do I Start Windows Using Last Known Good Configuration? for a walkthrough specific to your version of Windows.