There's some confusion going on here about what an ordinal is, so let me start at the beginning.
A linear order is a set $S$ together with a binary relation on $S$, $\prec$, with some reasonable properties:
(transitivity) $a\prec b$ and $b\prec c$ implies $a\prec c$; and
(trichotomy) For all $a, b\in S$, exactly one of the following holds:
$a\prec b$;
$b\prec a$; or
$a=b$.
Some examples of linear orders include $\mathbb{Z},\mathbb{Q},\mathbb{R},\mathbb{N}$ with the usual orderings, but there are other weird ones too (like the Sharkovskii order, an important object in dynamical systems theory).
Now, amongst all linear orders, we're interested in the ones with a particular property: well-orderedness.
A linear order $(S, \prec)$ is well-ordered if it has no infinite descending sequence $s_0\succ s_1\succ s_2\succ . . .$; equivalently, if every nonempty subset of $S$ has a $\prec$-least element.
For instance, the naturals are well-ordered, but the integers, the rationals, and the reals (with the usual orderings anyways) are not.
The interest in well-orders mainly comes from the fact that they support proof by induction:
Exercise: suppose $(S, \prec)$ is a well-order, and $P$ is some property of elements of $S$ such that $P(s)$ holds whenever $\forall t\prec s(P(t))$. Then $P(s)$ holds for all $s\in S$. HINT: consider the set $\{s: \neg P(s)\}$. . .
Now it turns out that well-orderings "look like $\mathbb{N}$ with stuff at the end." For example, consider the ordering on the naturals we get by "moving $1$ to the front": $$2\prec 3\prec 4\prec . . . \prec 1.\quad (\forall m, n\in\mathbb{N}[m\prec n\iff 1<m<n \mbox{ or } n=1, m\not=1]).$$ This is also a well-ordering (exercise).
Now let's go back to ordinals. One usage of ordinals is to name terms in a sequence; that's the one you mention in the OP. In set theory, though, the more common usage is to name the shape (or order type) of a sequence. What do I mean by that? Well, $$2, 1, -117$$ has three terms - I'm going to say it has order-type $3$. Similarly, $$1, 2, 3$$ has order-type $3$.
"$\omega$" is the symbol we use to describe the order type of $$1\prec 2\prec 3\prec . . .,$$ that is, of the natural numbers with the usual ordering. Now here's the fun bit: what is the order type of the well-order $2\prec 3\prec 4\prec . . . \prec 1$ described above?
Well, consider the map $f: x\mapsto x+1$. This gives an order-preserving bijection from the naturals with their usual order, to this weird order except $1$. Basically, this new well-order has ordertype . . . $\omega+1$!
We can make longer and longer well-orderings. For example, the order type of $$1\prec 3\prec 5\prec 7\prec . . . \prec 2\prec 4\prec 6\prec 8\prec . . . .$$ is $\omega+\omega$.
This should hopefully give some intuition behind what ordinals (= order-types of well-orderings) are doing. I've stopped short of ordinal exponentiation, but I think getting a good grounding in what ordinals mean, intuitively, is more important at first.