It's encryption for your wireless traffic. Without encryption someone can be near your network and 'see' your traffic, 'sniff' your traffic. An example would be me sitting in front of your house with a laptop and a sniffer running. I could literally see everything you are doing, and decoding your sessions. With an assembled packet stream I could read your usernames and passwords if you were communicating with insecure applications, and that happens allot. I don't even need to be connected to your network to so this. The sniffer operates at layer 2, network connectivity as most people know it is at layer 3 with regards to IP addresses.
Nevermind the jargon, just encrypt your traffic! Then it would only take hours or days to do what I just said, but then if your traffic isn't visible in the first place, no one will know it's there. ;^)
Got it. Thanks.
Securing your Wireless Network
Improve Home Network Security
In addition, as this article says, configure your wireless router to NOT broadcast your SSID (Service Set IDentifier). Even so, change your SSID to something that more closely resembles a password (i.e., with a combination of alpha, numeric, and special characters), like 'J0urn@1' - or even better yet, let a 2-year old type it out, and get something like '@Ef8df8(*33v]' :-). I live in a fairly "wireless" neighborhood, and you wouldn't believe how many SSIDs I "see" out there, with names like "default," etc.
Change your password frequently!