A "Fistula in Ano" is a track, lined by granulation tissue, which connects internally the anal canal or rectum with externally the skin around the anus. It usually results from an anorectal abscess, which bursts spontaneously or was opened surgically. This track once formed does not heal on its own and causes recurrent infection, discharge of pus, bleeding, pain, itching, fever etc. such a fistula needs surgical intervention.
You can see how a Fistula grows with this animation. Further below is a list of pages that will help you understand Fistula better.