Market capitalisation (market cap) is the value of all of a company's shares at today's price. A company with 1 billion shares at $50 has a market cap of $50 billion.
Companies are grouped by it: large caps (in Australia, roughly the ASX 50), mid caps and small caps. Most indices weight members by market cap, usually adjusted for shares that are freely tradable.
Why it matters
Larger companies tend to be more diversified and less volatile; smaller ones more tied to the domestic economy and to borrowing costs, with more room to grow and more risk of failure.
General information, not advice.