What is a Personalized Profile?

Is it were you can put pictures and backgrounds on a profile???

You mean from admin panel=>general=>Configuration=>Profiles and the "Personalized profile" section? that option allows you add add other fields to a members profile. That way you can add new informations besides the default ones(Location,Language,Humor,Job/hobbies) You can also choose to make any of the fields you create to be edited by members(in their own profile) by other members, Moderators or Administrators.