@Mith
basically... it's packet buffering in an effort to reduce the total number of packets sent across the net.

how is it done? basically, as you send data... that data will be added to an 'out basket'... and if the basket fills up, it is shipped immediately. if the basket 'times out' before filling up... the contents are shipped immediately. the result for gamers would be an increase in latency as the keypress doesn't leave exactly when you hit it.

more here:
http://en.wikipedia.org/wiki/Nagle_algorithm