The SmartDashboard is a graphical user interface used to communicate information from the robot to the drivers (and the programmers, during testing).
To send data to the dashboard, use
SmartDashboard.putString("String name", "Data");
To get data, say
You can also use Number (doubles) and Boolean (booleans) instead of String.
See also here for a little more information.
Because we do not have direct access to the console for logging purposes (errors and warnings only), SmartDashboard can be used for debugging purposes. Additionally, you can put the camera on the dashboard, which is great for the drivers (especially with tall things like stacks of totes). It is also possible to make graphs of variables over time and more complex widgets using the smartdashboard. Refer the the WPILib Screensteps for more information on this.