"Traffic" is a general term for the amount of visitors that a site receives in a given period of time. Traffic is a the time-honored measuring stick for how successful a site is at attracting visitors - the more traffic, the more successful the site. Traffic can come from several sources, and a good site cultivates all of these:
Conversions are almost always a percentage of total traffic, so obviously the more traffic the better. In addition, the ability to cite respectable traffic figures can sometimes make or break a business deal, a request for a reciprocal link on another site, etc.
Traffic figures can usually be easily derived from the basic site statistics package offered with most site hosting packages.