In simple terms, Liquidity in crypto basically means how easy it is to swap one coin for another or for fiat without affecting the price too much.  If its liquid, you can trade big amounts without seeing the price budge. Kinda like trying to dump a swimming pool into a lake versus a kiddie pool - the lake's volume can handle it better.  More liquidity signals a healthier market overall, with enough buyers and sellers present so things stay relatively stable.  Definitely something to watch for with smaller cap altcoins especially.

You can find some more info here: What is Liquidity in Cryptocurrency?