Parenthetical reference is also known as parenthetical notation or in-text referencing. This kind of notation is generally used in research papers, articles and books where it is necessary to credit another source for information that has been used by the researcher. There are primary sources (original documents) and secondary sources. If you refer to a book or article that has been written about a specific subject, this is a secondary source and you must credit the author that compiled that information. This is when you provide parenthetical referencing.
There are guidelines as to how to properly punctuate when using parenthetical references. And in terms of the construction of the research and the implementation of notations, the parenthetical referencing should be concise, specific and accurate. One should place the notation where it does not interfere with the "flow of the text:"
Place [notations] at the end of the phrase, clause, sentence, or paragraph being referenced.
All of the sources one uses in a research paper, professional article, etc., are listed on a Works Cited page at the end of the paper or as notations at the end of an article. The sources on this list coincide with all of the sources parenthetically notated in the paper, article, etc.
If I were to define parenthetical referencing, it would be similar to the following:
Parenthetical referencing is used when a writer has accessed another person’s research to support his or her own methodical inquiry, and provides detailed documentation of that source in order to give credit to the author of the original source material.
The most important thing to remember when researching is that referencing (crediting an author) is absolutely necessary to avoid committing plagiarism ("literary theft").
Any directly quoted or paraphrased ideas, words or facts taken from another must be referenced.