Nash equilibrium is an equilibrium—a stable point—in game theory. Game theory dives into how players play a game, given costs, incentives, and their consideration of each other’s move. In particular, Nash equilibrium is an equilibrium where all players have the incentive to stay with their initial strategy, even if it’s not the best outcome for both players combined.
One type of Nash equilibrium that gets talked about a lot is the prisoner’s dilemma, which is when there are two prisoners, each of whom are separated and questioned by police. Based on the incentives of the game, both prisoners are incentivized to rat on each other, even though they’d both be better off if neither of them told on each other. Each prisoner knows the other has the incentive to tell on the other, so it makes more sense to do the same—rather than to not give away your partner while they give you away.
The point of the prisoner’s dilemma is to show that Nash equilibrium isn’t always the best possible outcome—it’s just the point where both people won’t change what they’re doing, because that’s the most rational move for both players based on the other player’s move.