Private Work Items
When creating or editing a work item you can mark it as Public or Private:

You can click on the button shown above to toggle between Public and Private. The privacy status of a work item is inherited by its children. That is, if you create nested work items, then they will inherit the privacy status of their parent. You can easily see the privacy status of a work item when on the work item page, as shown below:

Public Work Items
A public work item can be viewed by anyone in your organization.
Private Work Items
Private work items can only be viewed by the owner and assignees associate with the work item.