What is Liquidity?
How easily a coin can be bought or sold without moving its price much.
On a centralized exchange, liquidity comes from the orders waiting in the order book. On a decentralized exchange it comes from tokens deposited in a liquidity pool.
On DEX pages we show liquidity in US dollars: the value of both sides of the pool. On a standard pool, a buy worth 1% of the pool's total liquidity pays about 2% more than the quoted price and leaves the price roughly 4% higher. Low liquidity means high slippage and makes a token easier to manipulate. Liquidity that can be withdrawn at any moment is the basis of a rug pull.