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Digital Rights Management. When you buy an ebook from Amazon and download it, before it is sent to you, you need to specify which of your kindles you want to read it on. Then they add something to the file before sending it to you such that only THAT kindle will be able to open it. If you copy the file from the kindle's folder and paste it into even another kindle that you own, it will not open. You also can't edit the book or change it to another format like epub.
If you remove the DRM it becomes possible to edit the book, change formats, and read it on any ereader you own.
Calibre itself does not remove DRM, but it is a very nice library program for sorting, rating and categorizing your ebooks.
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