Slippage is the difference between the expected price of an order and the actual price of an order at execution, caused by volume affecting price.
Generally, slippage is inversely correlated with liquidity. The more 'deeply' liquid a market order book or liquidity pool is, the less slippage traders will incur when swapping.
Slippage is a deterrent for all traders but is especially relevant to traders looking to take larger positions in a given cryptoasset. For instance, a trader seeking to make a $1,000 swap in a liquidity pool with $100,000 in deposits will not move the price (incur slippage) as much as a trader seeking to make a $10,000 swap and thus will enjoy greater capital efficiency. As a result, slippage imposes a constraint on institutional investors and/or 'whales', as they must incur more slippage (capital inefficiency) and/or spend more time entering and/or unwinding from nominally larger investment positions than a smaller-sized portfolio would when making the same allocations as a percentage of assets under management (AUM).