Well latency is the time it takes for the signal to go into the software, do it's stuff, and come back out, which will be a small amouht. It's the reason things come out a little bit delayed when monitoring live through the software.
A lot of times, low latency is good because you minimize the delay, and it can be annoying and make things hard to work with. For example, you can get used to playing electric guitar direct with some latency in the playback, but something like vocals would be a total pain with high latency in playback, as you'd hear the direct sound from the room as well as the delayed signal in your phones.
Other times you may want to intentionally set it to higher latency when you're not doing anything that a longer latency will be a problem, because you can utilize more resources that were otherwise taken up by things such as buffers. But most of the time low is good, and you probably wont need to fiddle with it unless you're having problems because of too high latency interfering with your recording process.