To swap out your old loan with a more favorable loan. The new loan pays off the old loan, so you just make payments on the newer (presumably better) loan. Sometimes a borrower will borrow a little extra during refinancing to take some equity out of an asset (known as "cash out" refinancing).
To learn more about refinancing, when it makes sense, and the costs involved, see Mortgage Refinancing Basics.
Also Known As: Restructure, cash out
I refinanced my loan so that I'd pay less in interest.