References live in a separate .bib file that works as a database. You cite entries by key, and LaTeX builds the reference list.

The database

Each entry has a type, a key and fields. The key is what you cite.

@book{knuth,
  author = "Donald Knuth",
  title = "The TeXbook",
  publisher = "Addison-Wesley",
  year = "1984"
}

Citing with BibTeX

Cite with \cite{key}, choose a style with \bibliographystyle, and point to the file with \bibliography (no .bib extension).

According to Knuth \cite{knuth}, TeX is great.

\bibliographystyle{plain}
\bibliography{refs}

This prints "According to Knuth [1], TeX is great." followed by a References list with the matching entry.

biblatex gives you more citation commands and ready-made styles such as APA. Load it in the preamble and register the file with \addbibresource.

\usepackage[style=apa]{biblatex}
\addbibresource{refs.bib}

\textcite{knuth}   % Knuth (1984)
\parencite{knuth}  % (Knuth, 1984)

Print the list where you want it with \printbibliography.

Use one method per document: either \bibliography with BibTeX, or biblatex, not both.
Keys are case sensitive. A key missing from the .bib file shows up as [?] in the PDF.