In the beginning it was only God... and nothing else:
"In the beginning God..." (Gen 1:1)
He sent into the nothing an emanation of himself: a light, and from this emanation came a succession of ten other emanations, each containing less of the divine substance. These emanations are called the Sephiroth ('numbers' or 'categories').
The lights of the Sephiroth are God's identity; the Name of God:
"...We can only comprehend him through those luminous emanations which again are partly visible and partly concealed. These constitute the sacred name of God." (Zohar)
The universe is made of 10 spheres, much like an onion as it is peeled away, the outer skin being the Prime Mover from which God emanates all. As the soul departs from God, it makes its way through the spheres to the Earth (the physical body), the farthermost sphere. It is a miniature image of the whole onion (universe, God). The soul's ascent and descent through these spheres underlie the theories of Cabala. Man unites with God by making his or her way up through the Sephiroth, or the Tree of Life, climaxing into its very source.
The first emanation of God, the thought, was the Mother of all things. It split to form the Active Wisdom and Passive Understanding. The Union of the two is the foundation of the Universe. The remaining parts of the Sephiroth are the products of the Union of Hokmah and Binah. All things in the Universe result from the interaction of active and passive, positive and negative.
"Everything rests upon the principle of the stimulation of the inert yet all-potential [Binah] by the dynamic principle [Hokmah], which derives its energy direct from the source of all energy [Kether, God]. In this concept lie tremendous keys of knowledge; it is one of the most important points in the mysteries." (Dion Fortune)
Of the Tree of Life, the sephiroth:
"It is a glyph, that is to say a composite symbol, which is intended to represent the cosmos in its entirety and the soul of man as it relates thereto; and the more we study it, the more we see that it is an amazingly adequate representation; we use it as an engineer or the mathematician uses his slide-rule, to scan and calculate the intricacies of existence, visible and invisible, in external nature or the hidden depth of the soul." (Dion Fortune's The Mystical Qabalah)
"The ten spheres or Sephiroth connected by the 22 paths of the Hebrew alphabet, form the Tree of Life (Otz Chaim), the central glyph of the Qabalah. The Tree of Life describes the steps between mundane consciousness (represented by Malkuth) and the divine (represented by Kether)." (Whitcomb, The Magician's Companion, p. 209)
The names of the sephiroth are derived from Scripture. The first three:
"And I have filled him with the spirit of God, in WISDOM, and in UNDERSTANDING, and in the KNOWLEDGE, and in all manner of workmanship." (Ex 31:3)
"The 'spirit of God' refers to Kether, while 'Wisdom' and 'Understanding' refer to the next two sephiroth, Chokmah and Binah, as well as the hidden sephira Daath that follows these two sephiroth." (Kaplan, Sefer Yetzirah: the Book of Creation, p. 23)
The next seven:
"Thine, O Lord, is the GREATNESS [Gedulah], and the POWER [Geburah, Severity], and the GLORY [Tiphareth, Beauty], and the MAJESTY [Netzach, Victory]: for ALL THAT IS IN THE HEAVEN [Hod, Splendor] and IN THE EARTH is thine; thine is THE KINGDOM [Malkuth], O Lord, and thou art exalted as head above ALL [Yesod, Foundation or Kol, All]." (1 Chronicles 29:11)
"Here all the names of the lower sephiroth are defined. Most of the time the first of the lower sephiroth is called Chesed (meaning Love), rather than Gedulah (meaning Greatness), and the next to the last sephiroth is normally called Yesod (Foundation) rather than Kol (meaning All)." (Kaplan, Sefer Yetzirah: the Book of Creation, p. 25)
Kether (Crown) is the topmost sphere, followed by Chokmah (Wisdom), then Binah (Understanding), Daath (Knowledge), Chesed (Mercy), Geburah (Severity), Tiphareth (Beauty), Netzach (Victory), Hod (Splendor), Yesod (Foundation), and Malkuth (Kingdom).