significance of out parameter

In addition to what Wayne explains:

The keyword out also says that the parameter should change the value in the method implementation. The code sample below shows that constraint and explains essential difference between ref and out; both modes are by-reference:

struct MyStructure { /*...*/ }

struct SomeType {
    void SomeMethod(ref MyStructure reference) { } //does nothing, but it will compile
    void SomeBadMethod(out MyStructure reference) { } //will not compile because out parameter is not assigned
    void FixedMethod(out MyStructure reference) {
        //...
        out = new MyStructure(/*...*/); //this will fix the above method, will compile
    }
}

[EDIT]

Also, a calling code is not required to initialize a variable used as out parameter (as it will be initialized as a result of the call).

—SA

Did you try Googling this? I found these:
http://msdn.microsoft.com/en-us/library/t3c3bfhx(v=vs.80).aspx[^]
http://msdn.microsoft.com/en-us/library/aa645764(v=vs.71).aspx[^]

The out descriptor tells the intermediate language compiler to copy the actual variable storage location, not just the value at a storage location. Out parameters are often most useful for value types such as bool because there is no other easy way to return multiple values without allocating an array or object.

Even the variable passed as out parameter is similar to ref, but there are few implementation differences when you use it in C# .

Argument passed as ref must be initialized before it is passed to the method, where as in case of out its is not necessary, but after a call to the method as an out parameter the variable must be initialized. Also the out argument cannot be used until its value is set. This means that values cannot be passed in in an argument marked with out.