An allegory is a literary work which has two or more levels of meaning: one literal level and one or more symbolic or figurative levels. Please visit the links below for more information.
If we were to look at the play, Everyman, for its literal meaning, we would read a story about a character named Everyman who goes on a journey to the end of his life (death) and tries to get his companions (named Fellowship, Kindred, etc.) to accompany him along the way. Sadly, we learn that all of those who he trusted end up leaving him at the end of his life when he needs them the most. Everyman only has Good Deeds left, however he is shackled by Everyman's sin and cannot help him. Good Deeds tells him to visit Knowledge, where Everyman learns that in order to set Good Deeds free from sin he must repent and find salvation. Once Everyman does this, Good Deeds is able to accompany him into death, and he is the only friend that is able to remain standing with him before the presence of God.
When we view this story as an allegory, we understand that the character of Everyman is, of course, every human being. We see beyond the literal characters of Fellowship, Goods, etc. and understand them to be symbolic of what every man faces in life: the search for true meaning and fulfillment in things that will last. The moral of the story becomes clear in that we need to examine now what in the end will truly prove to be of value.