It means in practice that a central bank is worried that inflation is rising too fast. Prices are rising and it may be due to too much money sloshing around the economy. Borrowed money (a bank goes to a central bank and borrows money, which is then loaned out) is just like printing money. When you borrow on a credit card, you print money, just like the US treasury.
If you increase interest rates, it makes it more expensive to borrow from the government for banks. They then raise interest rates on their customers and credit card companies. Everybody thinks a little more before they borrow.
Ideally, this makes people think a little harder before they buy stuff, and purchase things that are priced fairly. So you stop crazy inflation before it gets going.