Take for example, the i5 3570K.
The 3 means its in the 3rd generation family. If the first number is higher or lower, its from a different architecture or manufacturing process.
The last 3 numbers show which processor it is. The lowest in the Ivy Bridge i5s (3rd gen) is the 3330 and highest 3570.
The K is the suffix. K means it has an unlocked multiplier for overclocking. There are a few more variants, but its not too common on the market.
Across generations (2500K -> 3570K -> 4670K), the performance difference is around 10%. But there are quite a few things that change.
Go here to see the list of all Intel CPUs: http://ark.intel.com/