A B-spline blending curve formulation is:
$P(u)=\sum_{k=0}^np_k B_{k,d}(u)$
Given $n+1$ control points, B-spline blending functions are polynomials of degree $d-1$, $(1<d<=n+1)$.
This much is easy to comprehend.
Now comes the part I am not able to make any sense of.
Each polynomial function is defined over $d$ subintervals of the total range of $u$. The selected set of subinterval endpoints $u_j$ is referred to as a knot vector.
What is the purpose of knot vector? What is its physical significance?
The knots are the argument values where the polynomial pieces join together. Or, saying it another way, between any two consecutive knot values, the spline is just a polynomial. So, the knot vector reflects the choices you made about how to build your spline from polynomial pieces.
To understand how knot values affect the shape of curves, geometrically, I recommend you read about "blossoming" (also known as "polar forms"). There's a good introduction here. It's actually the knot intervals (distances between knot values) that affect the shape of the curve, not the knot values themselves.