I guess this is a total noob question, but doesn't 18-55mm mean that it can focus only up to 55mm?
There is a fairly simple explanation here: http://www.paragon-press.com/lens/lenchart.htm
To summarize from that site:
Simply put, the focal length of a lens is the distance from the lens to the sensor, when focused on a subject at infinity. To focus on something closer than infinity, the lens is moved farther away from the sensor.
Focal length and focus distance are two different things.
Focal length controls the viewing angle, essentially meaning how much of the scene the camera can see. A large focal length means the camera sees only a narrow view of the world, which makes faraway objects look bigger. A small focal length, on the other hand, means the camera can see a wide view of the world. Objects appear smaller because lots of things get squeezed into the picture.
Focus distance is controlled by moving the lens further away from the sensor, so that the light rays from a single point on an object nearby converge to form a point of light on the sensor. If a 55mm lens were 55mm from the sensor, only objects infinitely or very far away would be in focus. To bring a scene into focus, the lens must be moved away from the sensor until all the rays of light converge to form distinct points. This is why almost every lens can focus on distant objects, but macro lenses (which focus on very close objects) are more expensive.
For additional reading, check out: http://www.howstuffworks.com/camera.htm
The maximum magnification, not the focal length, determines how close a lens can focus. A maximum magnification of 1.0x means you can fill the frame with an object that is the same size as the sensor (so you are getting a 1 to 1 scale reproduction) which for a typical DSLR is about 21mm.
Traditionally the term "macro" is used to describe lenses that were capable of 1:1 magnification, although certain manufacturers (*cough* Tamron *cough*) decided to start labelling lenses with 0.25x magnification as "macro".
The Canon 18-55mm f/3.5-5.6 lens has magnification of 0.34x meaning you can get close enough to focus on an object of width 62mm when it's filling the frame.
There's usually no maximum focus distance, all regular lenses will focus to "infinity". However some lenses designed for super close focussing such as the Canon MP-E 65, lenses with extension tubes (hollow tubes to move the lens further away for closer focussing) or lenses designed for a different mount (such as FD mount lenses on EF body) wont be able to focus to infinity.
No, it means that the focal length is adjustable between 18 and 55 mm.
The focal length affects the angle of view, so 18 mm gives a wide angle and 55 mm gives a more narrow angle.
How near and far you can focus depends on the optics in the lens. Usually the near limit is a pair of decimeters to half a meter, and the far limit is infinity.
It's rare for a lens to focus as close as 18 mm. A macro lens usually has a shorter near limit, sometimes almost up to the front lens.