In LaTeX 2.09, only document styles could have options such as
twoside or draft. In LaTeX2e, both classes and packages are
allowed to have options. For example, to specify a two-sided article
with graphics using the dvips driver, you write:
\documentclass[twoside]{article}
\usepackage[dvips]{graphics}
It is possible for packages to share common options. For example,
you could, in addition, load the color package by specifying:
\documentclass[twoside]{article}
\usepackage[dvips]{graphics}
\usepackage[dvips]{color}
But because \usepackage allows more than one package to be listed,
this can be shortened to:
\documentclass[twoside]{article}
\usepackage[dvips]{graphics,color}
In addition, packages will also use each option given to
the \documentclass command (if they know what to do with it), so you
could also write:
\documentclass[twoside,dvips]{article}
\usepackage{graphics,color}
Class and package options are covered in more detail in
The LaTeX Companion and in LaTeX2e for Class and Package Writers.