Reading the two digits
IP stands for ingress protection. The first digit is protection against solids such as dust, on a scale of 0 to 6. The second is protection against water, on a scale of 0 to 9.
IP20
Protected against fingers and larger objects, with no protection against water. This is the normal rating for indoor fittings such as panels, COB spotlights, track lights and strips in dry rooms.
IP65
Dust tight, and protected against water jets from any direction. It handles rain, dust and washing down, which makes it the standard for wall lights, floodlights, street lights, bollards and gate lights.
IP65 does not mean a fitting can sit under water. For that you need IP67 or IP68.
Where each belongs
Dry interiors: IP20 is fine. Balconies, bathrooms near the shower, exterior walls, gardens and anything open to the monsoon: use IP65.
Remember the connections. A sealed fitting with an exposed joint in the cable is no longer weatherproof, so drivers and joints need protecting as well.