what is noise floor?

Every system will have some noise inherent in the electronic circuits themselves. What your friend is hearing is the noise inherent in the circuit of his amp and preamp. Some are quieter than others (due to circuit design, layout of internal components and wiring, and the internal component parts themselves). Interconnects, speaker cables and power cords will also have an impact. So will the quality of the electrical power to the system.

The critical issue about this inherent noise (the noise floor of your system) is its volume relative to the music. Systems with materially high inherent noise will reduce the reproduction of the low volume details of the music, reduce the overall dynamic range of the system, and reduce the sense of "aliveness" that some systems are able to achieve.

To lower the noise floor: be aware of the contribution your cables are making and chose accordingly, supply good clean power to your system (dedicated isolated ground electrical lines, etc.), clean and apply a contact enhancer to your connections (like Pro Gold or Walker SST or Mapleshare Silclear), use fewer active devices in your system's signal path. Of course, component selection will play a big role.
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All electronic equipment will make noise, hums and hisses etc. One of the designer's jobs is to keep the noise as low as possible. If the equipment is too noisy, when you play music at low levels, or if the musical infomation is subtle, then it can be overwhlemed by the noise. So the lower the noise floor, the better.

All electronic equipment has some electrical output even when there is zero signal input, and this electrical noise becomes audible noise when a speaker is hooked up.

Some people, particularly audiophiles, would say that what comes out when there is zero input is the noise floor. This definition certainly has the merit of simplicity. For the curious, a more analytic definition follows.

If you did a spectral analysis of the noise you would probably see several frequencies with high amplitude. (A spectral analysis is just a plot of the noise level at each of many frequencies). Such frequencies with high amplitude generally can be related to a particular aspect of the circuitry, and can often be reduced by targeted redesign. It's a safe bet that 60 Hz, and harmonics such as 120, 180, 240..etc will show up in the USA, and 50, 100, 150 ...etc in some other countries. The 60 and 120 Hz frequencies are so common that we actually have a name for them, "hum". After identifying all these high amplitude frequencies, fixing some of them, and disregarding others, there will remain a relatively low amplitude at all other frequencies. On a plot this looks like a floor, out of which poke the high amplitudes previously mentioned. The floor may slope up or down vs frequency, but will be smooth. The floor as I define it represents the noise which cannot be fixed (except perhaps by a completely different circuit). Actual audible noise may be higher. For example: I would not include hum in the noise floor, because you ought to be able to fix it.