Blockchains are isolated systems by design — a smart contract can't independently check a stock price, a sports result, or the weather. An oracle is a service that brings that outside data onto the blockchain in a way smart contracts can use, most commonly price feeds for DeFi applications.
Because so much of DeFi relies on accurate price data (for lending, liquidations, and trading), oracle reliability is a genuine security concern — a manipulated or faulty oracle feed has been the root cause of real exploits in the past.