Definition
AssetBundles package scenes, prefabs, textures, audio, and other assets into one file the game loads on demand. Addressables build on them. You choose the compression per bundle: LZMA for the smallest download, LZ4 for fast chunked loading, or none. Bundles can be hosted remotely and updated without a new player.
Relevance
An AssetBundle is how you ship content separately from the player. A level, a character, or a seasonal pack can be downloaded and updated without a new build. After the first load, Unity caches the uncompressed assets on the device so later loads are local.
Example
A seasonal event bundle is downloaded on launch day. The game caches it unpacked. The next launch loads the characters from that cache instead of downloading them again.