What exactly does "Multipath I/O" mean?
This term is used most commonly in reference to how SAN storage volumes get connected to the servers that they're assigned to. For instance, with a multipath fibre channel setup, there would be redundant fiber paths between the SAN and the server, with each path going through different FC switches, connecting to different FC cards, etc. This way, if any single piece of hardware goes down (be it a FC switch, FC card, fiber patch, etc.), IO will still be able to continue. The same principles can be applied to iSCSI.
In addition to ErikA's excellent response, multipath io (MPIO) not only provides a redundancy enhancement, but also a performance enhancement if both/multiple paths are utilized.