It stands for Doctorate of Philosophy, and is a qualification in the same way that a GCSE is. To get a PhD though, the requirement is that you have to create new knowledge – which means that you need to discover something or invent something brand new. Now this only has to be a tiny thing, but you do have to be able to prove why it’s new and why it’s important.
This means there are no exams during a PhD (yay!). Instead, at the end of 3 or 4 years you write a report (which can be almost as long as a book!) that describes all your discoveries. For that, there is no grade – you either pass and get to call yourself ‘Dr. so and so’ or you fail 🙁
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