"Tethering" can refer to making use of your cell phone and its internet access (if you also have a data plan) as a wi-fi hotspot for your ereader (or laptop/netbook) to gain internet access.
Say you needed to download a book from your cloud storage, or wanted to buy a book and had to do it right then but you and your reader were away from home and weren't near any free wi-fi spots. There is a way you can "tether" your ereader to your phone, either wired or wireless, with certain phone apps or hacks, that will allow your reader internet access through your phone. There are many uses for such a setup, some of which might not be legal as far as your cell phone company is concerned. Sometimes they freely allow tethering, but sometimes it's clearly written as not allowed.
I setup my phone to be able to do it just in an extreme emergency if stranded and my netbook (and I think the Kobo Glo as well), but so far I've never had a need to use it. I'm sure there are people who use it more often though to get free data through their cell phone plans. I keep an SDcard with books on it in case I'm ever out and need to reset my reader so I'm not stuck with nothing to read, and I'd prefer doing that than hassling with tethering to get my cloud-stored ebooks.
Here's one example:
http://tablets.wonderhowto.com/how-t...tphone-411929/