In the SDL wiki it says
Use this function to perform a fast blit from the source surface to the destination surface.
However that
It copies memory from one place in memory (source) to another place in memory (destination).
Eg. It can copy the pixels from one bitmap to another, from a bitmap to texture, or any of the above to the screen's surface or the screen's back buffer surface.
Say you have an image/tile that you want to display on the screen. You would perform a "blit" to copy the memory making up the image to the memory that is used on the screen.
It is, essentially, calling a function very much similar to memcpy() which copies the bytes specified as the source one-by-one to the bytes specified as the destination.