To further elaborate, 'libs' are 'libraries', and are essentially chunks of code that perform common tasks that can be shared between many addons. For example, many addons provide a configuration GUI where you can change settings. Rather than every addon author writing code to create checkboxes and sliders, for instance, authors can choose to use a library that handles the boring details for them.
To make things easier for users, most addon authors don't ask you to go download all of the libraries their addon needs separately. Instead, the libraries the addon needs are included inside the addon's folder, often in a 'Libs' subdirectory. This system is commonly referred to as 'embedded libraries'.