In one line
Retention is the share of users who installed or signed up at a given point that are still coming back some days later — commonly measured as D1, D7, or D30.
Why it matters
No matter how much new traffic comes in, if it all leaks out, you're "pouring water into a leaking bucket." Retention shows whether a product actually holds on to people. It's best measured per cohort.
A common mistake
Don't average retention across cohorts unweighted — cohorts vary in size, so a naive average overweights small cohorts. Weight by cohort size (installs/signups) for an accurate read.
Go deeper
How to properly read a retention curve is covered in Cohort Analysis.