Short answer
Liquidity is how much money sits in a token's trading pool. More liquidity means you can buy or sell larger amounts without moving the price much.
On a decentralized exchange, every trade swaps against a pool holding the token and SOL or a stablecoin. The deeper the pool, the smaller the effect of any single trade on the price. In a shallow pool, even a modest buy can push the price up sharply, and a modest sell can crash it.
Liquidity also decides whether you can get out. A token with a big market cap but tiny liquidity can look valuable while being almost impossible to sell in size.
As a rule of thumb, compare your trade size to the pool. If your order is a meaningful share of it, expect heavy price impact and set your slippage carefully.
See the checks for yourself
18+ only. Self-custodial: you keep your keys. 0.5% per trade, no minimum. Memecoins can go to zero.