A satellite is a tournament to win entry into a larger tournament. Let's say a site is having a $100 buy-in tournament tonight. Some people won't want to spend $100 on one tournament, so for those people, they'll offer a satellite where they will run a 10-man tournament where the winner gets free entry, and charge something like $10 - so the 10 people are putting up the $100 (10 x $10 = $100) but each is only risking 10% of the fee.