The part of the sock that actually cradles the heel and bottom of the foot is known as the heel and is usually knit in a manner known as "turning the heel."
Turning the heel is accomplished by knitting short rows, working part way across the row and then turning back before all the stitches in the row have been knit. Nothing scares new sock knitters more than turning a heel.
This is, of course, not the only way a heel can be made, but it is a popular choice for knitters new to sock knitting.
In the picture at right, the turned heel is the part knit in light blue.