A content identifier, or CID, is a label used to point to material in IPFS. It doesn't indicate where the content is stored, but it forms a kind of address based on the content itself. CIDs are short, regardless of the size of their underlying content. page 
For a deep dive into how Content Identifiers (CIDs) are constructed, take a look at ProtoSchool's tutorial on the Anatomy of a CID (opens new window).