From what I understand, it means matching up the ports on the heads, intake manifold, throttle body, exhaust, so they all match up perfectly for unrestricted airflow. In some cases, polishing the ports is also provided, since grinding is involved anyway to remove material to match up those ports.
Porting the valve areas in the heads also tries to produce smoother airflow without restrictions or creating turbulence. But honestly, some folks claim that turbulence in this area is actually good.....
Generally speaking, I believe the increase in horsepower is mostly a factor of increased airflow through those ports.
Here's a page that helps explain some things ->
http://www.chevyhiperformance.com/te...ing/index.html