Oops! I Inked!
Anti-aliasing means there aren't any "jaggies" -- jagged sections of line where you can easily see the square pixels. Anti-aliasing makes the line just a little bit fuzzy so that the pixels don't seem square. Without anti-aliasing, a picture will often look like it was drawn in MS Paint, which doesn't have anti-aliasing (at least as of Windows 7). This image illustrates the difference, though it's zoomed way in -- of course the fuzziness is not meant to be obvious at normal size.
BTW, I should probably clarify what "inking" means. In the context of comic/animation art, "inking" always refers to drawing the final outline on top of the pencil lines. The lines should look dark and clean, as if they were drawn with ink (which, of course, they traditionally were and often still are). Traditionally the outline was always black, though the use of computers means now they're often dark shades of color. In some art styles, like in MLP:FiM, the outlines aren't even that dark. But in any case, it refers to the process of making polished outlines and nothing else.
And it drives me insane.
Fine... after a few years, I fixed it... at least I think. Brightened up some colors, different background, and no bullshit white jaggies.
This always bothered me for some reason, don't know why.