Let's say that you sell beach towels and you're participating in Google Shopping.  That means you're bidding on certain keywords and paying when people who search for those keywords are clicking on your products.

You probably want people who search for "towels" to find your products.  And you're probably ok paying for clicks because someone likes your towels they're going to buy it.

Now let's say someone searches for "paper towels".  Guess what - there's that "towels" word again!  But this time you don't want to be paying for clicks because someone is probably not going to buy your towel instead of the paper towels they were looking for.

To avoid this situation where you're paying to show up in search results that aren't relevant to your products you need to add negative keywords (aka negative match) to your Google adwords account.  Adding these negative keywords prevents your product from showing up in searches using those keywords.  In this example, you may want to add "paper" as a negative keyword for your beach towel products.

Here's a helpful article from Google about how to add Negative Keywords to your campaigns.