Latency stands for the time it takes for the instrument to produce a sound after you press a key on your MIDI controller. It can be an issue when using VST instruments in real time. Latency depends on your audio hardware and its ASIO driver.

In the Studio Setup dialog (Audio System page), the input and output latency values should ideally be a few milliseconds.

If the latency is too high to allow comfortable real time VST instrument playback from a keyboard, you can use another MIDI sound source for live playback and recording, and switch to the VST instrument for playback.