Stands for "Optical Character Recognition." This technology is what allows you to scan that paper you lost on your hard drive, but fortunately printed out, back into your computer.
When a page of text is scanned into a computer without OCR software, all the computer sees is a bunch graphical bits, or an image. In other words, it has no idea that there is text on the page, much less what the text says. However, an OCR program can convert the characters on the page into a text document that can be read by a word processing program. More advanced OCR programs can even keep the formatting of the document in the conversion.