Essentially how much a song is compressed. The more it is compressed, the lower the bitrate, and the lower the quality. Bitrate actually means how many bits (a small size of space on your computer) are taken up per second of music. 128 kbps is commonly referred to as CD quality.
96kbps is commonly considered the lowest bitrate for quality Internet radio.

If you are using aacPLUS you can go lower and still get great quality.