The referral traffic refers to the visitors that come to your site from the direct links on other websites rather than from the search engine. In simple words, the visits to your domain directly from other domains are called referral traffic. For example, a site that likes your page may post a link recommending your page. The visitor on this site may click on this link and visit your site.
You can also increase referral traffic by leaving links on other blogs, forums, etc. when you put a hyperlink of your page on other websites like forums users will click and visit your webpage. Google tracks such visits as referral visits or traffic. So, it is a Google’s way of reporting visits that come to your site from sources outside of search engine.