This term is used to describe a preset value for some option in a computer program. It is the value used when a setting has not been specified by the user. For example, the default font setting in Netscape Communicator is "Times." If you don't go to the Netscape preferences and change it to something else, the "Times" font will be used -- by default. Typically, default settings are set to what most people would choose anyway, so there's often no reason to change them. However, if you're one of those people who has to customize everything that you possibly can, then you can go ahead and change all the default settings you want.
"Default" can also be used as a verb. If a custom setting won't work for some reason, the program will "default" to the default setting. For example, say you're working on computer that is on a network and you print something when there is no printer specified. If you're lucky and don't get some nasty error message, the print job will default to the default printer and your work will be printed.