Joined May 1, 2013
Hi Furqan.
Be careful if you are a novice as this schematic shows part of a power supply. When you deal with power supplies you deal with potentially deadly voltages. If you are a novice i suggest you stay away from them for the moment.

Now for the answer: the circuit starts with a diode bridge whose job is to turn an AC voltage into a DC voltage. This means that you should connect a low AC voltage (12v for example). Then U1 will turn it into a lower and regulated 5v and feed it to the LED.

Here is a great read for you: