Ok, PWM stands for pulse width modulation. A 555 is an integrated circuit, which is described as a universal timer. In the application you suggested, you would use it as an oscillator (ie, something that goes between 2 states at a set rate). So, what you would be doing is switching the LEDs on and off very fast. Now, by adjusting the PWM, the LED can be made to appear brighter or dimmer, according to how wide the pulses are. If more of the pulses are mostly high, the LED is on more of the time in relation to off, so it appears bright, and vica versa.