Looking up definitions for niche market, you would probably understand that it is a certain material or target product market that you actually concentrate on.
From this, you will understand that a business that focuses on a certain niche market concentrates solely on the needs and wants for a product or service that other people do not usually give.
Take for example, instead of trying to make profit out of a big market like offering lawn mowing services, a business owner can choose to offer lawn mowing services specially for the handicapped.
What are the benefits of niche marketing? First and foremost would be the fact that you may be the only person offering that "specialized" business.
If you are able to come up with a niche that is truly unique but is still appealing to the masses - that would be a big plus, since other small businesses may not be aware that this is possible while big businesses like won't really care, which means less competition.
In order to make a profit out of this, you need to find a market that has an easy-to-reach audience, people you can get your business out to through forums, or other online media.
Once you have found the niche you want to work on, you need these people for your marketing, even if they may not be interested in what you are selling, they may know people who are.
So summarizing everything; if you want to succeed in any niche market, look for a niche that works, and know how to market your niche, the rest will follow suit.