It's when someone buys domain names that look like the URLs of major websites, but are actually misspellings. For example, if you mistype Google as "gooogle," you might end up at a typesquater site. You generally want to stay away from these sites, since most of them are scammers or spammers
Typosquatting refers to URL hijacking, where fake sites are setup in hopes that someone will incorrectly spell a legitimate site and will reach the fake site. For example goggle.com or goooogle.com might be used for typosquatting.
This technique can be used to hijack some of the traffic from the intended webpage. Alternatively the fake website might look very similar to the real one and exploit you for personal information (such as an online banking site).