I am developing my first serious application for iOS and I am doing it for my friend (not for public use). So it will be a gift. Now question: How would my friend be able to instal this application? Is there any easy way to share my app with him? I am very confused on how I can share my app on private basis with few people only and how they can easily install it.
You can share apps you develop by means of Ad-Hoc distribution. This involves adding the UDID of their device to your developer account (and consequently a provisioning profile) which lets you install the app on devices outside of the App Store.
For more information on Ad-Hoc distribution, see:
Apple does not operate a private App Store for non-apple use other than the custom business store and it's unlikely individuals would be accepted into that program so you have to self host the content as described above.