UK postcodes are alphanumeric and between five and eight characters long (including a single space separating the outward and inward parts of the code), e.g. the code for the House of Commons is SW1A 0AA. These codes were introduced by the Royal Mail between 1959 and 1974. They have been widely adopted not just for their original purpose of automating the sorting of mail, but for many other purposes — eg. Postcode lottery.
The 'Outward' part of the postcode denotes the postal district - for example RH for the Redhill area, and then the following number distinguishes the post town - broadly speaking the Delivery Office which services the local area. So RH1 is Redhill itself, RH10 is Crawley. With larger towns there may be more than 1 number in the outward section - Crawley includes RH10 and RH11. The 'Inward' part denotes particular parts of the town / Delivery Office area, with the first part - the number - being an area, and the final two letters denoting a group of houses within that area.
A series of five-digit codes may also be used on business mail. This is called Mail sort – but is only available for mailings of 'a minimum of 4,000 letter-sized items'. Discounts are available for such bulk mailings based on the type of mail and how pre-sorted it is.