It is the process of dropping the temp of your beer after it has finished fermenting to below 2 degrees. Temps are generally dropped quickly, and it helps to settle out yeast, proteins, hop matter if you've dry hopped etc etc. If is often done in conjunction with fining agent like gelatine or polyclar.
It should not be confused with lagering, which is a very different process.
The time you need to leave it cold for, is very much temperature dependent. The lower the temp (without freezing of course), the faster it will clear.
Might be worth searching this forum for some more info. There is bound to be heaps (some useful, some not so much).