It counts how many tokens a system generates, or processes, in total each second across all users. It is different from latency, which is how long one request takes. Batching many requests together raises throughput, since the hardware is used better, but can make each individual request wait longer.
It sets the cost of serving a model. The more tokens per second a GPU can produce, the lower the cost per token. Quantization, a faster serving engine and hardware with more memory bandwidth all increase it.
Published figures depend on the test: prompt length, output length, batch size and precision all change the result.
Compare numbers only when the conditions match, measure with your own prompts and report throughput together with latency so that the trade-off is visible.