According to Wikipedia a Conversion Rate is "the ratio of visitors who convert casual content views or website visits into desired actions based on subtle or direct requests from marketers, advertisers, and content creators".
If you are an E-commerce website selling widgets, that may mean a sale. If you are a subscription based website, that may mean a new member signup. But every website should always be thinking about conversion rates, even a simple informational website. We all want our users to be doing something, even if it is just picking up the phone to call, or request more information about our services.
In pursuit of that quest, Smashing Magazine has another great article with tips for website stakeholders to help increase their website conversion rates.