Settlement is when cash and shares actually change hands. In a margin account you barely notice it. In a cash account, proceeds from a sale are not usable for a new purchase until they settle, and using them early is a good-faith violation.
Options settle T+1 as well. futures-contracts are mark-to-market daily instead.
Example: in a cash account you sell stock Monday. The cash settles Tuesday. Buying another stock Monday with that money and selling it Monday is a violation; three violations in a year restricts the account to settled funds only.
Related: regulation-t, pattern-day-trader-rule, settlement