Kerning refers to the process of adjusting the space between letters in typesetting and graphic design.
The word originally comes from the French carne, meaning projecting angle or quill of a pen. In the days of manual typesetting, letters were placed on individual metal blocks known as glyphs. If a letter overlapped the following letter (e.g. a capital T before a capital A), the overlapping parts (the bars of the T), would protrude over the edge of the glyph, and these exposed parts of the letter were known as kerns.
You might not think kerning is important, especially because most digital text is automatically kerned for your pleasure. Here’s a nice example from Wikipedia of the benefits of kerning: