Very general terms--
The intake port is the hole in the head leading from the intake pipe to the intake valve. Likewise, the exhaust port is the hole in the head leading from the exhaust valve to the exhaust pipe.
"Porting" means using cutting and grinding tools (and, rarely, building up the material with welding) to change the shapes of these holes. Traditionally, this is done to open them up and allow more air to pass through them, allowing the generation of more power at high throttle settings and high RPMs. Note that air flow through a tube can be kind of odd, so just opening up the ports can result in less power if done indiscriminately and without good knowledge.
There may be a few instances where a good port job helps engine efficiency at the power levels that we typically care about, but that would be a very significant exception, and the original parts would have to be quite sub-optimal for it to help noticeably.
-soD
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