In terms of video games, a cooldown is a set length of reload time implemented to prevent spamming of a spell or ability. This cooldown is used mostly on CPU/GPU intensive graphic effects that could cause lag in multiplayer games when a player spams that spell.
In some cases, a cooldown replaces casting time allowing you to use other spells or abilities while you await for the cooldown to reload.
A cooldown is not bound to only spells or abilities. In Diablo 3, Healing Potions will have a cooldown to prevent players from spamming heals like in its predecessor.