BibTeX is a tool used to create bibliographies in LaTeX documents. The tool assumes that you have a large database of references which you often quote. Simple commands allow you to cite certain of these references in your LaTeX source, and BibTeX then creates a bibliography for your article containing only the items cited.
Here is a brief example taken from The LaTeX Companion by Goossens, Mittelbach, and Samarin. Consult this book for many additional details. Suppose the database is a file called "mybibliography.bib" containing the text shown below. In this text, the entries "Felici:1991, Knuth:WEB," and "Liang:1983" are key values used to cite the articles in the LaTeX source.
Suppose the LaTeX source file is called "myfile.tex" and contains the following text:
When this source is typeset, a reference to Felici's article will appear in the text, and a bibliography will be created at the end of the text containing the articles of Felici and Liang, but not the article of Knuth.
TeXShop can be used with this example in the following way. First edit and typeset the document "myfile.tex" as usual. Citations will appear in the output as "[?]" and the bibliography will be missing. Then select "BibTeX" under the Program button and run BibTeX. Next select "LaTeX" and typeset again. Citations will still appear as "[?]", but the bibliography will be added to the output. Typeset a final time, and citations will have their correct values.
The file "mybibliography.bib" can be opened and edited by TeXShop. If you use TeXShop to create the file "mybibliography.bib" in the first place, use the pulldown tag labeled "file format" to save the file as a bib file rather than as a tex file.