Lead time is the time it takes from placing the order to having the product stocked and ready to ship. This will be default setting for all products but you can later adjust this per product basis on the detail view.
We use lead time in our forecasting equation to calculate how many days ahead of time you should place an order to restock the product in time before it runs out of stock.
It's always better to set the lead time slightly longer than too short to make sure you don't run out of stock.