It is actually very easy. A pre-approval involves you talking to a bank loan officer or mortgage broker. They will gather some information about your needs, your desired monthly payment, and also gather information about your current income. They will run a credit report, and based on all the information they gather, they will determine how much financing you qualify for, and what interest rate that they can acquire for you.
This is a very important step in the home buying process. Sellers take a buyer much more seriously, and will be much more willing to negotiate with a buyer if they have already been pre-approved for the purchase price of the home.