Describe the way that Subjects and Observers communicate

I am studying about java observer pattern now and I do not understand perfectly. If you guys do not mind, could you please explain "List and describe key interface methods and parameters" and "Describe the way that Subjects and Observers communicate" ???

public interface Observer {
void update();

}

public interface Subject {
void attach(Observer var1);

void detach(Observer var1);

void notifyAllObservers();

int getState();

}

public class ConvertSubject implements Subject {
private List<Observer> observers = new ArrayList();
private int state;

public ConvertSubject() {
}

public int getState() {
    return this.state;
}

public void setState(int state) {
    this.state = state;
    this.notifyAllObservers();
}

public void attach(Observer observer) {
    this.observers.add(observer);
}

public void detach(Observer observer) {
    this.observers.remove(observer);
}

public void notifyAllObservers() {
    Iterator var1 = this.observers.iterator();

    while(var1.hasNext()) {
        Observer observer = (Observer)var1.next();
        observer.update();
    }

}

}