The concept is everywhere present in the real world about us. Simply put it is to take a large complicated problem and to divide it into smaller manageable pieces. The hierarchy chart of any large organization (government unit, company, university, hospital, etc.) will show levels of people with job titles that indicate a different area of responsibility. Each person is a small piece of the overall workings of the organization. Each person can concentrate on their unique talent or task to make sure it works properly. Collectively they accomplish the goals of the organization.
Additionally, the concept has been around for a long time. A village of 300 years ago had farmers, tailors, butchers, blacksmiths, etc. Manufacturing is a prime example of not just work being modularized but the product itself is viewed in terms of modules or systems (Example of a automobile: engine, steering, brakes, etc.).
The world of computers, both hardware (equipment) and software (computer programs), also uses this modular concept. Thus, the concept migrates to a single computer program; allowing us to modularize the program into manageable tasks called functions.