Technically it is an area of memory on your computer that is reserved to temporarily store output or input data. A "buffer" will hold data that is being transferred from a high-speed device to a low-speed device until the transaction is complete. A common use of buffers is to hold the data sent to a printer as the printer accepts the information at its own pace.
Another more common use of "buffering" involves streaming video. If you've ever watched a video on the Internet, most likely you've seen the word blinking at the bottom of the postage-stamp-size screen during a download. Fortunately the potential of new streaming video services - fast, full screen and in sharp resolution - are finally a reality due to the increasing popularity of broadband Internet connections in homes.
Historical Perspective: In 2007, the DVD rental company Netflix began to take advantage of click-and-view streaming of full-length films and television episodes with a subscription service. Their "Watch Now" tab reveals more than 3,000 television episodes and movies which come up in 30 seconds or less because there's no downloading. And as of 2010, Netflix put Blockbuster out of business.