Turbo Boost is a feature that, when fewer than the total number of cores are being used, the processor can turn off the unused cores and increase the clock speed on the rest of the cores. This increases performance (the cores that are being used get faster) and can reduce power usage.
For instance, if you have the 2011 MacBook Air with the 1.6 GHz Core i5 (as detailed in this AnandTech article), the "Turbo Ratio" is set to 0047. The number sets the amount of boost by digit (4 cores = 0, 3 cores = 0, 2 cores = 4, 1 core = 7; this is a dual-core CPU, so 3- and 4-core mode is irrelevant). The number specifies the boost in 100 MHz increments above the listed clock speed, so if two cores are running, they can be boosted to 1.6 GHz + 400 MHz = 2.0 GHz and if one core is running, it can be boosted to 1.6 GHz + 700 MHz = 2.3 GHz.
To see what your system is set to, go to Console and open the kernel.log (or system.log in Mountain Lion*), then search for
AppleIntelCPUPowerManagement and look for "Turbo Ratios". The Mac I'm on now (a 2.0 GHz Core i7 MacBook Pro), for example, has Turbo Ratios set to 6689 for a maximum clock of 2.9 GHz when using only one core.
* thanks to @gentmatt in the comments below