The process of narrowing down a high-level user pain point or product functionality to a specific set of requirements, necessary screens to design, and details around who should have access to the feature.
Here's an analogy.
When you decide you want to replace the sink in your bathroom. You know the high-level idea of what you want to do, but you need to do feature definition before you actually replace the sink. Feature definition is the process of asking questions like: What dimensions does the sink need to be? Do you want it to have cabinet space? Should the counter be granite or marble? Once you have these questions answered, you can move forward with a clear plan.
Why does it matter?
Defining the feature before it is built allows for more dialogue between the business, technical teams, and user. This dialogue ensures that an effective and time-efficient solution is built that the user will love.
How does it apply?
Defining features helps make sure the product gets built the way it was intended. Proper feature definition ensures that the product is built correctly and cost effectively.