Long story short about Stonewall. It was a gay bar, primarily for drag queens in Greenwich Villiage in New York City. This was the 1960s, when you couldn’t really legitimately operate or attend a gay bar without police harassment, and the Stonewall, like a lot of other gay bars at the time, couldn’t get a liquor license, so it had mob connections and survived by paying off the police, but still was subject to a lot of raids.
One night, around midnight, the bar was raided, and the patrons who were being led to the police vans, instead of going along, fought back, barricading themselves in the bar and throwing things at the police trying to arrest them. At this, a crowd gathered. Backup was called, and two hours later, the riot was put down. Here’s a less than complementary story about it from the New York Daily News:
http://www.jaxgaypride.org/stonhist.htm
Why was Stonewall important? Prior to that, the gay rights movement had gone out of its way to be nonconfrontational, and emphasise gay people’s similarity to straights. After Stonewall, there was a new militancy, that drew from the black power and anti war movements. There came to be a lot more emphasis on direct action. You can even see the appearance of people at gay rights protests change. Pre-Stonewall, picketers would all dress in suits and ties, and march, and after Stonewall, you started seeing much less uniformity in dress and behavior. You also started seeing gay activists discuss removing homosexuality as a mental disorder, and decrease demands for equality. Pre-Stonewall groups, like the various homophile organizations and Mattachene, on the other hand, had much less ambitious goals. After Stonewall, there was also the idea that coming out of the closet was a good thing…that it was important to let other people know you were gay, which was another change from pre-Stonewall attitudes of “Look, let us be gay and we won’t bring it up.” It didn’t create the gay rights movement, but it did radicalize and spur it to activism.