In a nutshell, metadata is additional information used to describe and categorise something. A good business analogy is file storage.
Typically in most businesses files are simply stored in folders on a server. This means that the only ‘metadata’ that can be used to describe these is the name of the folder. This can make things very limiting, especially when perhaps, the file could refer to more than one thing.
Collaboration systems like SharePoint allow you to save files in something similar to a file system but it provides you with the ability to create as much additional ‘metadata’ about each item in these locations as you want.
Another way to think of ‘metadata’ is to imagine it like ‘tagging’ a file with a single phrases to better understand what it directly relates to. Doing so moves files and folders away from the typical hierarchical structure into something that is much flatter.
if you want take advantage of the benefits ‘metadata’ provides you need to ensure that files that go into the system have appropriate ‘metadata’ attached. Systems like SharePoint can enforce ‘metadata’ be entered at the time the file is uploaded to the system. This of course means that the definitions around metadata have been created ahead of time.
‘Metadata’ provides you much more flexibility around the information you use if implemented. It removes the traditional hierarchical method of storing information that generally only makes sense to a select few. Systems like SharePoint allow you to utilise ‘metadata’ throughout your information, from files to appointments, from discussions to lists. The good things is that the ‘metadata’ descriptions you use (known as taxonomy) can be applied globally across all your information.