The frets themselves are the thick metal wires embedded in the neck of a guitar on the finger board where you form the chords. When you say the 1st fret, though, it means the space between the nut (or fret 0, between the tuning pegs and the fret board) and the first fret. The guitarist applies pressure at this space which causes the string to be depressed exactly at the fret and, when struck, produce the note exactly 1 step higher than the fret before. Each fret represents a diatonic note, following the standard tempered scale. This means that the guitar is a tempered instrument, producing standardized pitches where the string meets the fret rather than where the guitarist's finger hits the string.