The purpose of an EQ is to tailor the IN CAR frequency response so that the music hitting your ears sounds the way the artist/producer/engineer wishes for you to experience it. That is one way to approach it.
Another way to approach it is by using the EQ as a sonic paintbrush and making the system response however you see fit. That is the way my ghetto based friends approach it.
From left to right, each band represents a point in the frequency response. It would go from super low to low to middle to high to super high. If your music is too bassy, cut down on the low bands. If your music is too crispy, cut down on the high bands. If you can't hear the singer, boost the middle bands.
Generally, there is a more correct curve than others that will make all your music, regardless of genre, sound really good. From there you can adjust for your peculiar listening habits.
For example, I've DJ'd for nearly 20 years of my life and have gone clubbing for the same amount. My ears are probably not as sensitive as others. In my case, my system is tuned to be heavier handed than most.
Now the above is an elementary way of describing an EQ, so if you need a more detailed description, please feel free to PM cam2xrunner.