Traffic source is where people come to your site from. Search engines, social media, an online magazine site, blogs, email marketing or a PPC campaign among many others can all be traffic sources.
Monitoring the performance of your traffic sources (with proper sales attribution) is important for optimizing your marketing efforts and budget. You might find that review sites actually bring you lots of traffic that converts or that the magazine features you pay for don’t work. You’ll see where qualified leads come from and be able to better allocate your marketing money.