Technically speaking, aeration is the naturally occurring process of air exchange between the soil and its surrounding atmosphere. Practically speaking, aeration is the process of mechanically removing small plugs of thatch and soil from the lawn to improve natural soil aeration.
In most home lawns, fertile topsoil may have been removed or buried during excavation of the basement or footings, forcing grass to grow in subsoil that is more compact, higher in clay content and less likely to sustain a healthy lawn.
Compact soil prevents grass from establishing a healthy root system and keeps water and fertilizer from reaching the roots. Aeration can help relieve soil compaction, allowing your grass to grow deeper roots and make better use of water and fertilizer.