Trunking, with relation to Ethernet, is the process of aggregating and tagging of information from multiple VLANs within a single switch and transmitting this information across a single physical link.
A single switch can contain multiple VLANs. These are logically segmented networks. If there is a need to expand these VLANs to another switch, one could assign one uplink port per VLAN. This means that if one has 5 VLANs, one would have to use 5 ports to pass information from that VLAN to another switch.
If both switches support a trunking protocol, such as Cisco's ISL or IEEE's 802.1q, information from all the VLANs can be tagged and aggregated together to be transmitted across a single trunk link. The receiving switch will then read the tags, remove them, and place the frames in the corresponding VLAN. This means that instead of one link per VLAN, you now have one link carrying the traffic from all the VLANs.