Token is a contributed module that provides placeholder text for dynamic values in other modules. Tokens look like bracketed strings, for example node title, that get replaced with actual values at runtime.
Many Drupal modules integrate with Token, including Pathauto for URL aliases, Metatag for meta tags, and various email sending modules. Without the Token module, these integrations would be much more limited.
Token also provides a handy browser in the admin interface that shows every available token. This is invaluable when configuring modules that accept token patterns. For example, when setting up Pathauto patterns like blog slash node title, the Token browser lets you see exactly which tokens are available for each context. It is one of those quiet workhorse modules that most Drupal sites install even if users never interact with it directly. Extremely useful and almost universally installed.