Generally it is taking multiple tracks and mixing them down to a new, single track.
You might, for ex., take background singers who are on seperate tracks and bounce that down to one "background vocals" track. This can help playback by reducing the number of tracks you are dealing with (assuming you delete or archive the original tracks). Generally it is advisable to backup your original tracks, in case you decide later on to change the mix.
Bouncing can also refer to the process of mixing down your entire mix to a single stereo track.