Socialisation means exposing your dog to different conditions so that he feels confident and comfortable when the same situation confronts him. Take an instance of a 5 year old human child who tends to shy when he's around new people in new place. The reason for this could be that he's not confident and he not been exposed enough to face this situation. However, the more he's exposed to new environment the more he becomes confident and break the shyness gradually.
Now take an instance of a puppy who's never seen moving vehicles during his puppyhood. Now, after 3-4 months after, the owner notices the dog relentlessly barking at the moving vehicles on the road. This is due to lack of socialisation. Another instance could be of a dog who hides under a table or bed when guess come to home. You notice the dog to be very scared and his body shivering in fear. This is also an legendry example of a dog wh's not been properly socialised enough during his puppyhood. Had the puppy been allowed to socialise new people, he wouldn't have been so meek when he grew adult.
A puppy who's well socialised will be confident in new situations and won't consider everyone and everything a threat to him.