It means that something prevents the wisdom tooth from erupting into its normal position, and it becomes either fully or partially stuck under the gum and bone. It can be impacted on the tooth in front, the bone behind, or the gum around the tooth.
The further under the gum the tooth is located, the more deeply impacted it is. Although this is a common term and people imply it will make the extraction more difficult, other factors such as the tooth's angle, the curve of the roots and the patient's age play an equally significant role.