A stream is a sequence of characters. More exactly, it is a sequence of bytes of data. A sequence of bytes flowing into a program is an input stream; a sequence of bytes flowing out of a program is an output stream. By focusing on streams, we don’t have to worry as much about where they’re going or where they originated.

The major advantage of streams, therefore, is that input/output programming is device independent. Programmers don’t need to write special input/output functions for each device (keyboard, disk, and so on). The program sees input/output as a continuous stream of bytes no matter where the input is coming from or going to.

Every C stream is connected to a file. In this context, the term file doesn’t refer to a disk file. Rather, it is an intermediate step between the stream that the program deals with and the actual physical device being used for input or output. For the most part, the beginning C programmer doesn’t need to be concerned with these files, because the details of interactions between streams, files, and devices are taken care of automatically by the C library functions and the operating system.

http://www.mycplus.com/tutorials/c-programming-tutorials/input-output/