This is the round-trip time between a request and a response. Generally, the term latency will be used in discussing websites to describe the time between clicking on a link, and then seeing a new page or element start loading.
These total round-trip times accumulate to become the *feel* of the speed or response times of a website, although that total time will behind the scenes be make up of a number of processes along that journey from looking up internet addresses, processing logic in code and retrieving data from a database.
It can also be used in business terms to describe the time between making a decision and seeing the results of that decision. If the decision results need to be measure and subsequently adapted based on those measurements, then the latency time will need to be accounted for as the period of time in which decisions will remain unmeasurable and reliant on experienced or educated guesses.