The TRUNC (number) function returns n1 truncated to n2 decimal places. If n2 is omitted, then n1 is truncated to 0 places. n2 can be negative to truncate (make zero) n2 digits left of the decimal point.
Typically, truncate means to reduce in size. Imagine you have a string of length 20 and you truncate it to a string of length 10. The last 10 characters in that case would be removed. It's probably something very similar in sql queries.