Abbreviation for Amplitude Modulation. AM is most known as a type of radio transmission scheme. It works by taking a carrier wave of some steady frequency (the frequency of the radio station) and modulating its amplitude based upon the audio signal to be transmitted. So if you were to transmit a 1 kHz sine wave over AM, you would vary the amplitude of the AM carrier wave 1000 times per second by an amount that represents the amplitude of the 1 kHz wave. When the AM signal is picked up by a receiver the carrier wave is stripped away leaving the original audio signal, which can then be amplified.
Amplitude Modulation is also a synthesis technique. While not as popular as its FM and subtractive synthesis counterparts, it has been an integral part of a few very well respected synthesizers over the years.