It's very impressive technology. Modulation is the changing of a signal from one form to another. You modulate your voice, adjusting how loud you talk, so people can hear you in different surroundings. In music, changing from one key to another is also called modulation. In computers, the modem modulates a computer signal so it can travel over phone lines because computer signals and phone signals are of different kinds.
Computers send discrete bits of information, ones and zeroes.
This kind of information is called digital. Phone lines send electrical versions of sound waves. The sound waves match exactly the sounds that reach the mouthpiece of your phone. It's a kind of information known as analog. The modem transforms the ones and zeroes into sound waves, and then a modem on the computer at the other end turns the sounds back into ones and zeroes.