Margin of error tries to strike a balance between two extreme methods of interpreting a poll:
(1) Dismissing the results altogether because any result is possible–after all, in a large population where only 1% supports candidate A, there is a miniscule chance that everyone in your random sample happens to support A, so you will report the wildly-wrong answer of 100%.
(2) Assuming the perfect accuracy of any result given. A poll shouldn’t be discredited because it said candidate A had 50% support when he/she really had 50.1%. The question is, how close is “close enough”?
To deal with (1), you assume a “confidence level”, which concedes that yes, this very very unlikely scenario could occur, but suppose I throw out the most egregious 1% of possible mis-readings (i.e. the ones where the polling is the farthest away from the actual value). What can I say about the remaining possible readings?
Surprisingly (if you haven’t studied statistics), there’s a lot you can say, because for even a modest sample this 1% covers a wide range of error values. This in fact allows us to deal with (2) by saying “I don’t guarantee perfect results, but I’m 99% sure that by choosing at least X people at random I’m within Y% of the right value, which is close enough for me.”
As an example, for a poll of 1,000 people (taken from, say, the ~150 million registered votes in the US), the result of that poll is likely to be within 4% of the true value 99% of the time, i.e. if 100 pollsters ran the same poll on the same population (each choosing different 1000-person samples), only one of them is likely to have a value that is more than 4% away from the actual value.
In my experience most pollsters run at a 95% confidence level. For this level of confidence, the margin of error is ~ 1/sqrt(n), where n is the number of people in your sample. Thus, a poll of 100 people would produce a result with a margin of error = 1/sqrt(100) = 1/10 = 10%, i.e. it’s 95% likely the real result is within 10% of the true value. If you want to boost your confidence to 99%, just add another 30% to the margin, e.g. that same poll would have a margin of error = 13% if you wanted to be 99% confident. It’s therefore more valuable to know the number of persons in a polling sample, since with this you can easily calculate either margin of error.
Finally, this value refers to the expected statistical effect assuming a purely random sample, so it is a “best possible” value–the math says you can’t expect the results to be any better, and if a poor methodology is used to select a “random” sample the potential error will be worse. Given the speed with which polling a large group can be done today, this is a far more important factor, which it why it’s worth reviewing a poll’s methodology before accepting its results, despite any veneer of legitimacy a “margin of error” calculation can lend it.