milling is when you cut down the entire surface of the head that comes in conact with the block. It is used to make sure there are even surface's to maintain a good headgasket seal. It also is beneficial in tuning because you can mill down the head to bring the combustion chamber down closer to the cylinder. This increases compression, but also has one disadvantage... if you mill too much, there is a chance that your valves will come in contact with the top of the piston.
Hope I helped...
PS

ne other thing to remember is that milling may cause your timing belt to fit looser.