A mobile site is a site (usually a version of your main web site) designed to be compatible with mobile devices (smart phones, iPad/iPod, etc).
There was a time early in the evolution of mobile browsing when a completely separate site was needed, but now as browsers are getting better you can often get away with just a different presentation layer (ex: browsing FlowerChat on a mobile device shows fewer graphics, mostly text, with little/no javascript). Some sites have a subdomain like m.facebook.com to server mobile-optimized content.