PWM stands for Pulse Width Modulation. Pulse width modulation describes a method of sending a signal as a pulse in order to drive analog components at varying power levels. By changing the width of the pulse, a smaller amount of power is delivered each period.
Pulse width modulation is used to control the brightness of display backlights. When the pulse is smaller, less power will be delivered to the backlight driving circuit and the backlight will be dimmed.